Posted Jan 10, 2023, 3:45 PMUpdated Jan 10, 2023, 4:34 PM
The year is definitely off to a bad start for Coinbase. Last week, the world’s No. 2 cryptocurrency trading platform admitted that it will have to pay a $100 million fine for not asking its customers for sufficient guarantees in the framework of the fight against money laundering. This Tuesday, we learn that it will cut back again in its workforce. After the plan operated in June, which saw 18% of employees leave, Coinbase will part with 950 additional employees, or 20% of the 4,700 people who were still working for the company at the end of September. The crypto sector is under pressure due to “ unscrupulous actors “, justified the CEO of Coinbase Brian Armstrong, with CNBC. A direct reference to the resounding bankruptcy of FTX and the fall of its founder, Sam Bankman-Fried, today prosecuted by American justice for fraud and criminal association, in particular. ” FTX’s collapse and resulting contagion gave the industry a bad name he said, adding that there will likely be a domino effect. He invokes the need for Coinbase to manage its costs, in the face of growth deemed “ too fast during the bullish phase of the market.
The social plan represents a cost of 149 million to 163 million dollars for the first quarter but it should make it possible, in addition to other restructuring measures, to reduce Coinbase’s operating expenses by 25% for these three months ending in March, if we are to believe the estimates appearing in a document sent to the American stock market policeman, the SEC. Coinbase also indicates there that the adjusted Ebitda losses over the year will be at the limit of “ guardrailof $500 million established last year.
The end of an era
In light of internal stress testing, “it became clear that we needed to cut spending to increase our chances of doing well in each scenario” and there was “no way” to do that without reducing headcount. , Brian Armstrong added to CNBC. The company will also put an end to several projects with a low probability of success.
Coinbase’s name is added to the long list of tech companies slashing their workforces. A few days ago, the American distribution giant Amazon announced the loss of 18,000 jobs worldwide, Salesforce dismissed more than 7,000 of its employees and Elon Musk, who rarely takes half measures, laid off half. Twitter employees. Finally, Meta (ex-Facebook) parted ways with more than 11,000 people, or 13% of its workforce. In the crypto world in particular, announcements are also multiplying: Genesis, Gemini and Kraken have launched social plans.
On Wall Street, Coinbase stock has been carried away by the turmoil that has rocked cryptos. The title is trading at less than 40 dollars, very far from its record of 429.54 dollars signed in April 2021. Last year, the stock market collapsed by 86%.