Crypto contagion deepens: Coinbase to lay off about 950 employees

Jan 10 (Reuters) – Coinbase Global Inc (COIN.O) said on Tuesday it will cut about 950 jobs, or 20% of its workforce, as part of a restructuring plan that marks the third round of layoffs for the cryptocurrency exchange since last year.

The company, whose shares were up 3.3% at $39.52, said it expects to incur about $149 million to $163 million in restructuring expenses.

“The entire industry is going through a crisis of confidence and trading volume remains very weak. This job cut is a reflection of the current challenging environment,” Oppenheimer analyst Owen Lau said.

Last year, rising interest rates and worries of an economic downturn wiped out more than a trillion dollars from the crypto sector.

However, the bigger blow came after crypto exchange FTX filed for bankruptcy protection in November.

“We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion,” Coinbase Chief Executive Brian Armstrong said in a blog post on Tuesday.

A representation of cryptocurrency is seen in front of Coinbase logo in this illustration taken March 4, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

“We will be shutting down several projects where we have a lower probability of success.”

Coinbase said it had no additional comment on the plan.

“This (job cuts) is a move that can help with near-term operating leverage,” said Mizuho analyst Ryan Coyne, adding that it would not fix the underlying issue of rapidly deteriorating volumes.

“It is going to require much more significant cost cutting to accommodate the current volume run rate.”

The crypto sector’s woes have continued this year, marked by plunging deposits, layoffs and multiple legal hurdles.

Coinbase in November cut more than 60 jobs in its recruiting and institutional onboarding teams, after slashing 1,100 jobs, or 18% of its workforce, in June.

The company’s shares lost about 86% of their value last year.

Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Saumyadeb Chakrabarty, Shinjini Ganguli and Shounak Dasgupta

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