The CEO of Coinbase said on Tuesday that he is laying off more than 1,000 employees of the cryptocurrency exchange, warning of an impending recession and a “crypto winter”.
The news comes as cryptocurrency markets tank, with bitcoin falling below $21,000 late on Monday – its lowest level since 2020. Smaller coins have fared worse.
“It looks like we’re entering a recession after a 10+ year economic boom,” CEO Brian Armstrong said in a note to employees. “Recession could lead to another crypto winter and last longer.”
Armstrong said that Coinbase’s revenue had “declined significantly” during the previous crypto pullback and that layoffs would help the company survive.
The company said in Tuesday’s filing to the Securities and Exchange Commission it was laying off about 1,100 employees, saying it expects to “spend approximately $40 million to $45 million in total restructuring expenses” related to the layoffs.
The news comes weeks after Coinbase was criticized for turning down job offers to potential employees who had already accepted them.
Coinbase went public in April 2021 near the peak of the cryptocurrency market. Its shares were down 7.3% in pre-market trading on Tuesday and have fallen 80% so far in 2022.
In Tuesday’s layoff note, Armstrong acknowledged over-hiring during the recent crypto boom.
“We grew very quickly,” the CEO said, noting that the firm had just 1,250 employees at the beginning of 2021. “While we did our best to fix it, in this case it is now clear to me that we have over-hired.”
Armstrong said laidoff workers would receive at least 14 weeks of severance, as well as four months of health insurance and mental health benefits.
Coinbase declined to comment beyond Armstrong’s email.
Other cryptocurrency firms have also hit the skids during the current market route. Two other crypto trading sites, Crypto.com and BlockFi, have laid off hundreds of employees over the past several days. Gemini, another crypto site controlled by the Winklevoss twins, saw layoffs in early June.
All four crypto exchanges have blamed the layoffs on broader issues in the economy.
Investors expect the Federal Reserve to drastically increase interest rates and are therefore withdrawing from riskier investments such as cryptocurrencies and fundraising rounds for non-profit startups.