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Coinbase is about to downsize its employment by 18% due to the FTX collapse
In order to “remain healthy throughout this economic slump,” Coinbase CEO Brian Armstrong announced today that the business will downsize its employment by 18%, or almost 1,100 individuals. The corporation is expected to fire about 60 individuals from its recruiting and institutional onboarding teams, according to The Information. The layoffs were communicated internally. The reduction will occur at a time when the cryptocurrency market as a whole is in disarray as a result of the ongoing FTX controversy, which has spooked investors and further depressed cryptocurrency valuations. Sam Bankman-Fried, the founder and CEO of the cryptocurrency exchange FTX, informed investors that he needed emergency funding to make up a shortfall of up to $8 billion caused by withdrawal requests that had been received recently. The deal to acquire FTX has also been abandoned by prominent cryptocurrency exchange Binance.
Due to the economic slump, the cryptocurrency exchange company stated in June that it will be cutting 1,100 employees or 18% of its workforce. While the business did its best to get this just right, CEO and co-founder Brian Armstrong had stated that in this case, it was obvious that it had over-hired. As the value of Bitcoin and other cryptocurrencies continues to fall, the collapse of the FTX cryptocurrency exchange has now brought about yet another round of threats to the whole crypto industry.
The cryptocurrency exchange, which listed last year with share prices reaching $350, has lost momentum and is currently trading at about $52 per share with a market worth of less than $12 billion. According to the source, Coinbase had already attempted to minimize costs before the FTX collapse as dropping crypto trading volumes were harming this year’s profitability. Armstrong said in a blog entry that he reached this conclusion after several discussions with his management team over the previous month. These layoffs, according to him, were primarily caused by the corporation developing “too quickly,” managing costs in down markets, and quickly changing economic conditions. The company’s labor costs rose with a 4-fold increase in the previous 18 months and were “too excessive to efficiently manage this uncertain industry.”
The price of cryptocurrencies plummeted this year as a result of rising interest rates and growing concerns about an economic slowdown, wiping out important firms like Voyager Digital, Three Arrows Capital, and Celsius Network. But once FTX started to show early signs of trouble, digital assets took a heavier hit. The larger crypto exchange, which has a history of saving failing crypto companies, is considering its options in light of a liquidity crisis and is currently under investigation by US regulators for its management of customer cash and its crypto-lending activities.
The cryptocurrency market remained unstable after Binance decided against buying out its bitter rival FTX Trading due to financial and investigational issues. Following due diligence, Binance has canceled its letter of intent to acquire competing for cryptocurrency exchange FTX. In addition, there are numerous reports that FTX handled consumer monies improperly.