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The cryptocurrency exchange platform Coinbase announced Tuesday that it will lay off about 1,100 people, 18% of its workforce, coinciding with the fall of cryptocurrencies, and warned of a possible recession that could lead to a “cryptowinter.”
The company’s CEO, Brian Armstrong, said in a statement that the layoffs are to ensure that they will stay healthy during the recession, he further explained that all those laid off will no longer have immediate access to the company’s system due to security concerns.
Armstrong, whose company made its debut on the New York Stock Exchange in April of last year, claims that this decision is in response to the fact that the market appears to be entering a recession after an economic boom of more than 10 years.
The CEO argues that, despite the difficulty of predicting the economy or the markets, this move is aimed at preparing for the worst, to be able to operate the business in any environment.
According to Armstrong, their employee costs are too high to effectively manage this uncertain market, and he admitted that they had hired more staff than they needed.
After the stock market opened, shares of the cryptocurrency portfolio were losing 5.33%.
The value of Coinbase shares has depreciated 79% this year against a backdrop of widespread falls in cryptocurrencies.
Bitcoin, the most popular cryptocurrency on the market, has fallen below $22,000 and has lost 53 % of its value so far this year.
Armstrong added that within an hour of the message being posted, affected individuals will no longer have access to the Coinbase system and will receive a message from the Human Resources Department in their personal mail with the terms of the termination.