Brian Armstrong said the crypto exchange remains strong and well-funded — but this is the second brutal round of job cuts he's made in the bear market so far.
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Ten months ago, Coinbase CEO Brian Armstrong bragged that the company would hire another 2,000 employees in 2022, despite the emerging crypto winter. Instead, it has laid off more than 2,000.
Coinbase announced on Tuesday that it was cutting another 20% of its staff, about 950 employees. That's on top of the 1,100 jobs lost when the firm cut 18% of its staff in June, and a smaller 60-person cut in November. In a blog post, Armstrong admitted:
"Over the past 10 years, we, along with most tech companies, became too focused on growing headcount as a metric for success."
Indeed, Coinbase was not the only major exchange making big job cuts, with Crypto.com cutting 2,000 and Kraken slashing 1,100 towards the end of 2022.
Armstrong also blamed the broader economic downturn as well as "the fallout from unscrupulous actors in the industry" — and warned "there could still be further contagion."
He added the Nasdaq-listed firm is well-capitalized "and crypto isn't going anywhere."
Indeed, Armstrong said he believes "recent events will ultimately end up benefiting Coinbase greatly" — pointing to growing regulatory clarity and the failure of a large competitor, FTX, which on and off pushed Coinbase out of first place as the largest U.S. spot exchange.
He said the cuts would mean some projects would be eliminated while others would continue with smaller staffs. He added:
"Despite everything we've been through as a company and an industry, I'm still optimistic about our future and the future of crypto ... Just like we saw with the internet, the most important companies not only survive but thrive during down markets by being rigorous with cost management, and continuing to build innovative products."
Wall Street's Happy
Investors reacted positively, with Coinbase's stock up almost 13% by the close of trading.
That said, the stock market has been brutal to Coinbase, which lost about 85% of its value in 2022 after big losses — $430 million in Q1, $1.1 billion in Q2 and $544 million in Q3.
In the 8-K filing made with the Securities and Exchange Commission after the layoffs, Coinbase said it expected its Q4 losses to be within the $500 million "guardrail" it predicted in its Q3 results.
