Coinbase announced on Tuesday it would be laying off about 25% of its staff, roughly 950 people. The cuts came amid a prolonged bear market for crypto and the collapse of major companies like FTX, with CEO Brian Armstrong writing in a blog post that there could be further contagion following the tumultuous past few months.

Coinbase has long positioned itself as a rule-abiding player in the crowded landscape of renegade crypto companies, buttressed by quarterly reports as one of the few publicly traded centralized exchanges.  

Last week, the New York Department of Financial Services announced it had reached a $100 million settlement with Coinbase due to failures in the exchange’s compliance program, which some onlookers took to be a sign that it was committed to long-term regulation.

Despite Coinbase’s efforts, Crypto Winter has hit the company hard—shares have decreased by almost 90% since November 2021, and the exchange posted weak third-quarter earnings in November, including a decrease in net revenue of almost 28%.

One of its only bright spots is the company’s holdings of USDC, a stablecoin pegged to the U.S. dollar, which Coinbase owns through a consortium with Circle. Due to rising interest rates, Coinbase has been able to collect revenue on those holdings, with “interest income” rising to $101.8 million in the third quarter of 2022, up from just $32.5 million the previous quarter.

Layoffs have followed the economic turmoil. In May, as the collapse of TerraUSD rocked the crypto landscape, Coinbase announced it would slow hiring after announcing it would triple headcount as recently as February. In June, the company laid off around 1,100 employees, then equivalent to roughly 18% of its workforce, with Armstrong conceding that the exchange had grown too quickly.  

Armstrong acknowledged current economic headwinds in Tuesday’s blog post, writing that tech companies have become too focused on growing headcount as a metric for success.

“Especially in this economic environment, it’s important to shift our focus to operational efficiency,” he said.  

Layoffs have rippled throughout the industry. In December, CoinDesk reported that more than 26,000 jobs were lost in 2022, and the trend has continued into 2023. On Jan. 5, Reuters reported that the crypto firm Genesis cut 30% of its workforce and the crypto-focused bank Silvergate had laid off 40% of its staff.

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