Further waves of reckoning surged through the cryptocurrency business on Tuesday, with exchange Coinbase Global Inc. announcing job cuts of about a quarter of its workforce and bitcoin lender Celsius Network LLC appointing a legal firm to investigate restructuring possibilities.
Because the company had grown too quickly and a hypothetical recession may lead to another crypto winter, Coinbase, one of the signal growth companies of the crypto boom, announced it was laying off 1,100 employees, or around 18% of its workforce.
Brian Armstrong, the company’s CEO, wrote to employees in a letter,
“We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue (our largest revenue source) has declined significantly.”
Coinbase, the largest cryptocurrency exchange in the United States, has struggled to retain consumers this year as the digital asset frenzy has subsided and markets have been volatile. The exchange announced in May that it had lost hundreds of millions of dollars in the first quarter due to a steep decline in trading fees. The exchange’s number of transactional users fell as well, and the company predicted that trading volumes and users will fall again in the second quarter.
Celsius gains new employees while Coinbase loses some
According to those familiar with the situation, Celsius, one of the major crypto lenders, has hired attorneys from the law firm Akin Gump Strauss Hauer & Feld LLP to help it solve its escalating financial troubles. Due to extraordinary market conditions, Celsius halted all withdrawals, swaps, and transfers between accounts on Sunday night, adding to the turmoil in cryptocurrency values. Akin Gump’s representative had no immediate response. Requests for response from Celsius executives were not immediately returned.
Since November, when bitcoin—the most prominent of them all—reached an all-time high of $67,802.30, the carnage in crypto markets has been broad and deep, with almost $2 trillion in value destroyed across various cryptocurrencies.
While the Federal Reserve struggles to contain the greatest inflation in decades in the United States, investors have continued to sell riskier assets such as cryptocurrency and technology companies.
