Under the weather… US crypto exchange Coinbase said it's laying off 950 people. In his announcement, CEO Brian Armstrong called out "unscrupulous actors" in crypto (an apparent reference to SBF) and mentioned last year's struggling macro economy. It isn't the exchange's first big cut:
Cost cutting: As crypto winter set in and trading volume dried up, Coinbase shed 1K+ employees in June and 60 in November.
Cost pumping: Last week Coinbase was hit with a $50M fine from NY regulators and agreed to spend another $50M on its compliance programs (think: KYC).
Crypto’s cold season… Coinbase isn’t the only one sick with crypto contagion. Last year, the industry shed 26K+ roles. More recently, big players stumbled after FTX's November implosion. Crypto lender Genesis laid off 30% of staff this month, in its second round of cuts, and is now said to be considering bankruptcy. FYI: it also reportedly owes $900M to customers of crypto exchange Gemini. Meanwhile, crypto mega bank Silvergate cut 40% of its workers last week following an $8B+ bank run.
Contagion comes in waves… When a big fish like FTX sinks, it can send ripples across the crypto pond. Those ripples aren't necessarily all felt at once, because it can take a while for other big fish to get hit by the wake. Coinbase’s Armstrong said there might be more contagion coming. But contagion's waves could ultimately leave the overall industry stronger — or more centralized — by washing out crypto's weaker players.