The exchange is reducing its workforce by roughly 18%. CEO Brian Armstrong admits the company "grew too quickly."
Coinbase Global (COIN) is laying off around 1,100 employees as part of a cost cutting plan, the company said in a filing on Tuesday. Coinbase initially said in May it was paring back its hiring plans and then later said it would rescind new job offers.
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The latest plan involves cutting the workforce by around 18% as of June 10, after which it will have around 5,000 total employees as of the end of the current quarter, the company said, adding that it expects the plan to be executed by the end of the second quarter. Coinbase estimated it would incur $40 million to $45 million in total restructuring expenses.
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On Tuesday morning, Coinbase CEO Brian Armstrong published a note that was shared with all employees.
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"We appear to be entering a recession after a 10+ year economic boom," Armstrong stated, before alluding to the potential of another crypto winter.
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The note concedes that the company "grew too quickly" in the cryptocurrency bull market, scaling from 1,250 employees at the start of 2021.
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Outgoing Coinbase employees received the news in their personal email addresses after access was cut from Coinbase systems, according to the note.
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Coinbase shares are down almost 80% this year as the sharp decline in crypto prices has hurt the exchange's transaction volumes. On Tuesday morning, shares of Coinbase rose about 1% in pre-market trading after the layoff news was announced. However, in regular trading shares were down about 3% to $50.40.
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In response to the announcement, Mizuho lowered its 2022 revenue estimates for Coinbase and reduced its price target from $60 to $45. It said it was concerned cutting workers could hurt efforts to find new revenue streams, potentially leading to a pricing war with rivals as competition rises.
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Coinbase is the latest in a slew of crypto companies to announce job cuts. On Monday, lending platform BlockFi reduced its headcount by 20% and crypto exchange Crypto.com said it would cut about 260 jobs. Prior to that, the Winklevoss-led exchange and custodian Gemini announced it was cutting 10% of its workforce, and Middle Eastern exchange Rain said it was cutting dozens of jobs.
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The cryptocurrency market is enduring its deepest correction for more than two years, with bitcoin trading at $22,150, 68% lower than its all-time high of about $69,000 reached last November.