In a third round of layoffs for the cryptocurrency exchange since last year, Coinbase Global Inc. announced on Tuesday that it will reduce its headcount by nearly 20%, or 950 employees, as part of a restructuring strategy.
The company stated that it anticipates restructuring costs to range between $149 million and $163 million. After surging more than 5% in response to the earlier announcement of the layoffs, its shares changed direction and dropped 2.7% premarket.
According to Owen Lau, an analyst at Oppenheimer, “the entire industry is suffering through a crisis of confidence and trading volume is very weak. This employment cut is a consequence of the current hard climate.”
Besides, more than a trillion dollars were lost from the cryptocurrency industry last year as a result of rising interest rates and concerns about an impending recession. Moreover, significant business closures also resulted from the downturn, including those of Celsius Network and Three Arrows Capital.
The greatest hit, though, came after bigger crypto exchange FTX declared bankruptcy in November. Due to its quick decline, major exchanges’ user money holding practices are now under intense regulatory scrutiny.
In a blog post, Coinbase CEO Brian Armstrong stated that “we also saw the consequences from unscrupulous people in the industry, and there could potentially be further infection.”
“We will be termination of a number of projects where we have a lower chance of success,” the statement read.
However, Coinbase stated that it had nothing further to say on the scheme.
In fact, this year has seen more problems for the cryptocurrency industry, including declining deposits, job losses, and several legal obstacles.
After having the need to reduce 18% of its staff or 1,100 employees in June, Coinbase slashed the size of its recruiting and institutional onboarding teams by more than 60 in November.
In keeping with the sector’s declining fortunes, the company’s shares lost about 86% of their value last year.
