On Tuesday, Bloomberg News reported that Coinbase Global Inc announced that it would be laying off 18% of the company’s workforce, indicating another signal of the crypto downturn getting worse, which has shaved off hundreds of millions of the entire cryptocurrency industry.
The Effects of Crypto Plunge
The largest digital asset trading platform in the United States is following on close heels of the other digital currency-related business entities that have late cut-off staff, which also includes following exchange Gemini Trust Co. and BlockFi Inc., the crypto lender. Both have cited the arrival of a prolonged market downturn, a crypto winter, as the cause of the layoffs.
Coinbase has aggressively recruited in recent years, with the strength of the workforce swelling to 1200 employees in the current year. The company plans to lay off approximately the same amount, thereby ending the current quarter with around 5000 employees. It was criticized earlier this month for rescinding the employment offer. Coinbase was seeking to present an outlook that would be optimistic through the market downturn, despite its shares declining.
Coinbase reported revenue that was lower than expected in the first quarter at the beginning of May and warned that the monthly transacting users, as well as the trading volume, would be lower in the second quarter compared to the first. In its filing, a new risk disclosure further triggered concerns among the users related to the safety of the crypto assets that were held in the company’s custody in the event of a bankruptcy.
Bloomberg News reports that the terminated workers would receive a minimum of 3.5 months severance aside from two weeks for every year of employment.
The market downturn in cryptocurrency started as soon as Bitcoin hit an all-time high in November. At the beginning of this year, the TerraUSD stable coin collapse and related Luna token wiped out billions from the market profits. In the last week, prices of coins dropped following lender Celsius Network freezing withdrawals amidst what many suspect that it was similar to a bank-run instance.
