Digital currency exchange platform Coinbase has said it will lay off 18 per cent of staff, following tight economic conditions and overly rapid expansion as the cryptocurrency market tumbles.
The platform said the Coinbase layoffs correspond to about 1,100 positions in a stock exchange filing.
This “difficult decision” was made “to ensure we stay healthy during this economic downturn,” CEO and co-founder Brian Armstrong said in a statement.
“We appear to be entering a recession after a 10+ year economic boom.”
The platform that allows users to buy and sell cryptocurrency, had already warned in mid-May that its number of active users was falling. The group posted a net loss of $430 million in the first quarter of 2022.
Bitcoin sank Monday to an 18-month low under $23,000 amid a broad cryptocurrency crash, as investors shunned risky assets in the face of a vicious global markets selloff, just seven months after the virtual unit surged to a record high.
With stock markets struggling since the beginning of the year and inflation at a four-decade high, tighter monetary policy across the globe has helped to send the crypto industry plummeting.
The company believes that managing costs are critical while the market experiences a downturn. According to co-founder Armstrong, the company has already weathered several periods of decline in cryptocurrency value.
But this time around, “we grew too quickly,” he said. Coinbase went from 1,250 employees at the start of 2021 to more than 6,000 currently.
The platform did not change its forecasts for the year but warned that its results would probably be at the bottom of the range of predictions.
Coinbase stock was down 6.2 per cent in pre-market trading after already falling 11.4 per cent on Monday.
The US tech sector is in a period of high volatility, with many start-ups announcing layoffs, while giants such as Facebook, Amazon and Uber have warned they are slowing the pace of recruitment.