Coinbase lays off 18% workforce before crypto winter

Coinbase, a cryptocurrency exchange platform, announced the layoff of approximately 18 percent of its workforce — or approximately 1,100 people — on Tuesday.

According to an email sent to employees on Tuesday, Coinbase will cut 18% of full-time jobs.

Coinbase CEO and cofounder Brian Armstrong attributed the company's drastic cuts to an impending recession in the United States and an impending "crypto winter."

According to Forbes, a "crypto winter" occurs when prices "contract and remain low for an extended period."

CEO Brian Armstrong warned of a possible recession, the need to cut costs, and the dangers of growing "too quickly" during a bull market.

"We appear to be entering a recession following a 10-plus-year economic boom," Armstrong says.

CEO Brian Armstrong mentioned the possibility of a recession, as well as the need to manage Coinbase's burn rate and increase efficiency.

He also claimed that the company expanded "too quickly" during a bull market.

Coinbase had initially stated that it would be pausing hiring.

Two weeks later, the crypto giant announced that the freeze would be extended for the "foreseeable future."

Coinbase announced earlier this year that it planned to hire 2,000 people in product, engineering, and design.

Based in San Francisco Coinbase reported a drop in users and a 27 percent drop in revenue year over year in its most recent quarter.

The majority of the company's revenue comes from transaction fees, which are closely related to trading activity.

According to Eswar Prasad, an economics professor at Cornell University, 2021 was the peak of crypto mania.