Coinbase Fires 18% of Its Workforce. CEO Says Company 'Over Hired'

Coinbase CEO Brian Armstrong blames himself for growing the company too fast, and he says this move is needed to be more efficient and manage costs during the crypto downturn.

This morning, Coinbase issued a statement that it will lay off 18% of its employee base, which equals out to about 1,100 people from its worldwide workforce. The message came from Coinbase CEO Brian Armstrong who said these actions are necessary as a result of rapidly changing macroeconomic factors, the critical need to control costs during the crypto downturn, and the fact that he grew Coinbase too quickly since 2021.

Perhaps the most surprising aspect of this news can be summed up in this tone deaf, ham-fisted paragraph that doesn't come across as being overly sensitive to employees.

"If you are affected, you will receive this notification in your personal email, because we made the decision to cut access to Coinbase systems for affected employees. I realize that removal of access will feel sudden and unexpected, and this is not the experience I wanted for you. Given the number of employees who have access to sensitive customer information, it was unfortunately the only practical choice, to ensure not even a single person made a rash decision that harmed the business or themselves," Armstrong stated in the announcement.

The largest cryptocurrency exchange in the United States also outlined in the announcement the separation package that it's offering. The specific benefits for all affected employees will include job placement assistance; four months of mental health counseling for all employees; four months of discounted healthcare for U.S. workers; as well as 14 weeks severance plus an additional two weeks for each year with Coinbase.

This announcement comes weeks after similar news that the company was rescinding an undisclosed number of job offers to potential workers as well as implementing an indefinite hiring freeze.

The crypto slump is hurting investors, which then hurts Coinbase

The crypto market in 2022 is down more than $600 billion in valuation according to media reports, as evidenced by Bitcoin's precipitous fall of 18% yesterday to the low-$20,000 range. While inflation continues to set 40-year records and the Fed continues to aggressively raise interest rates to try and slow that price pressure on consumers, investors -- specifically cryptocurrency investors -- are sitting on the sidelines not investing. Armstrong said in the announcement that the lack of investing volume is directly hurting Coinbase, because a significant percentage of its revenue comes from transaction fees incurred by traders who buy and sell digital assets on its exchange.

Is Coinbase a good buy?

At time of writing, the Coinbase (COIN) stock price was as low as $48.83, which was down about 4% on intraday trading according to Yahoo! Finance. For context, Coinbase had a launch listing price of $250 a share when it began trading under the COIN symbol on the NASDAQ stock exchange back on April 21, peaking at $429.54 before closing at $328.28.

This write-up is not financial advice, and investors should always do their own research, investing only amounts they can comfortably afford to lose. Even though COIN is priced at a steep 89% discount from its all-time high, the entire crypto space is too speculative and volatile for grizzled digital investors to dive in currently, let alone the average investor.