Only 3 days ago news broke that Coinbase was cutting its workforce by 20%. During reconstruction and stating that it was being more fiscally responsible, Coinbase let of 1/5th of its workforce. This lay off cost Coinbase $50-$60 million in severance pay. This was followed by abandonment of projects with a “lower probability of success”.
“Every company in Silicon Valley felt like we were just focused on growth, growth, growth, and people were almost using their headcount number as a symbol of how much progress they were making,” Armstrong said. “The focus now is on operational efficiency — it’s a healthy thing for the ecosystem and the industry to focus more on those things.”
Today new is that Crypto.com is following the lead of Coinbase. Laying off 20% of its workforce. Both Coinbase and Crypto.com state that their decisions are based on external factors.
“We grew ambitiously at the start of 2022, building on our incredible momentum and aligning with the trajectory of the broader industry. That trajectory changed rapidly with a confluence of negative economic developments,” Kris Marszalek, co-founder and CEO, wrote in a post addressing the matter.
Both Coinbase and Crypto.com grew ambitiously in start of 2022, and realized their they erred mid-2022. Crypto.com started slowly laying off around that time. And Coinbase did so late-2022.
“The reductions we made last July positioned us to weather the macroeconomic downturn, but it did not account for the recent collapse of FTX, which significantly damaged trust in the industry. It’s for this reason, as we continue to focus on prudent financial management, we made the difficult but necessary decision to make additional reductions in order to position the company for long-term success,” Marszalek wrote.
When FTX collapsed following mismanagement of epic proportions, trust and credibility in the Crypto industry fell drastically. S&P Global Ratings marked down Coinbase and will likely mark more Crypto focused Stock later on.
“We believe FTX’s bankruptcy in November has severely hit the crypto industry’s perceived credibility, causing a lack of retail engagement,” S&P wrote. “As a result, trading volumes across exchanges, including Coinbase, have declined sharply.”