"I realize that removal of access will feel sudden and unexpected, and this is not the experience I wanted for you," Brian Armstrong told them in a statement.
Coinbase has announced that it's cutting its workforce by 18% — with Brian Armstrong admitting the exchange "grew too quickly."
Explaining why things had to be done this way, the CEO wrote:
"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 appeared to take accountability for the shock announcement, which came just four months after the trading platform declared it was planning to hire 2,000 staff this year.
He warned that a recession appears to be on the horizon after an economic boom that lasted over 10 years — and warned this could lead to a fresh crypto winter that "could last for an extended period."
"In past crypto winters, trading revenue (our largest revenue source) has declined significantly. While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment."
Although Armstrong said Coinbase had managed to survive "four major crypto winters," he warned keeping costs down was critical to navigating bear markets.
And in a candid admission, the CEO conceded that the exchange had "over-hired." Reflecting on the start of 2021, when Coinbase had 1,250 employees, he said:
"At the time, we were in the early innings of the bull run and adoption of crypto products was exploding. There were new use cases enabled by crypto getting traction practically every week. We saw the opportunities but we needed to massively scale our team to be positioned to compete in a broad array of bets."
He revealed that Coinbase's workforce has more than quadrupled over the past 18 months, and "costs are too high to manage this uncertain market." Further, he said adding new employees has actually hampered the trading platform's efficiency — proving detrimental to productivity.
What Happens Now?
Laid-off staff were given just one hour's notice — but they will receive at least 14 weeks' worth of severance pay, alongside an additional two weeks for every year of employment. Health insurance will also be provided to affected workers in America, with mental health support available globally.
"Coinbase employees are among the most talented in the world, and I am certain that the skills you all possess will continue to be sought after by companies around the world. I realize it may take longer in this environment to find new employment, and so my hope is that this financial and non-financial assistance helps make this unexpected transition for you as seamless as possible."
He also expressed hope that Coinbase will one day hire them back — although it's unclear whether those affected would ever want to work for the exchange again.
Chief operating officer Emilie Choi, chief product officer Surojit Chatterjee and chief people officer LJ Brock were accused of making decisions "that are not in the best interests of the company, its employees and its shareholders."
Examples included "the failure of the Coinbase NFT platform," performance review systems that led to a "toxic workplace culture," and "unsustainable" hiring practices.
After the petition emerged, Armstrong called it "really dumb on multiple levels" — and called on the workers behind the petition to quit and work for a company they actually believe in.
Coinbase isn't the first exchange to announce layoffs — and it won't be the last.
BlockFi and Crypto.com both confirmed they were reducing their headcounts on Monday as they battled to remain profitable — joining the likes of Gemini and a number of Latin American exchanges.