Coinbase is still struggling with a worsening cryptocurrency market. The exchange has announced that it's laying off 18 percent of its workforce, or about 1,100 jobs, to help weather difficult economic conditions. There's a "crypto winter," according to company chief Brian Armstrong, and the move is purportedly necessary to keep costs down during this dark period.
Armstrong also saw this as a response to excessive optimism about crypto's future. Coinbase felt it had to grow rapidly in 2021 to compete across numerous sectors and take advantage of crypto's value surge, but it's now apparent the company "over-hired" while the market was strong. The exchange started 2021 with 1,250 employees, and will still have roughly 5,000 people employed by the end of the current quarter.
The layoffs have been abrupt. Coinbase cut affected employees' system access at the same time as the announcement to prevent "rash decision[s]" by outgoing staff. The firm is promising at least 14 weeks of severance pay, four months of US health insurance and help finding new work, but the decision comes after multiple attempts to avoid cutting jobs. Coinbase first paused hiring, and later rescinded accepted job offers as economic conditions soured.
Coinbase isn't alone in dealing with the effects of crypto's collapse. Binance is facing a lawsuit over the failed TerraUSD stablecoin, while major lender Celsius has frozen withdrawals to help stabilize assets and honor obligations. The plunge in Bitcoin prices following Celsius' move led Binance to halt its own withdrawals for several hours. Crypto is very fragile at the moment, and it doesn't take much for the technology's largest supporters to suffer.