Coinbase, one of the world’s biggest crypto asset exchanges, has announced plans to shed up to 950 jobs globally, 25 per cent of its global workforce with a number Irish roles expected to go.
In a blog post on Tuesday, the company’s chief executive, Brian Armstrong, cited the ongoing decline in crypto trading volumes and asset prices coupled with a broader economic downturn as the main reason for Coinbase’s latest cost-cutting push.
It follows a round of cuts last summer amounting to 18 per cent of the company’s total workforce.
The company employs more than 100 people in Ireland, most of them in customer service. The precise number of Irish jobs expected to be lost is not yet clear, however, it is understood the cuts here will be broadly in line with 25 per cent global figure.
The great Guinness shortage has lessons for Diageo
Ireland has won the corporation tax game for now, but will that last?
Corkman leading €11bn development of Battersea Power Station in London: ‘We’ve created a place to live, work and play’
Elf doors, carriage rides and boat cruises: Christmas in Ireland’s five-star hotels
A spokeswoman for Coinbase said the company cannot provide a regional breakdown of the headcount reduction.
However, she told The Irish Times: “In the face of increasingly challenging economic conditions, we made the difficult decision to start redundancy processes with a group of provisionally selected employees in Europe to reduce the size of our teams to strengthen our business and ensure we can weather anything else that comes our way. Europe remains a priority market for Coinbase and our commitment to bringing the benefits of crypto to this region is unchanged in light of these events. We will keep building great products and increasing economic freedom around the world so that when better days arrive, we will be ready.”
It is understood the redundancies will cost Coinbase between $149 million (€138.9 million) and $163 million (€151 million) in restructuring expenses, including severance packages and other benefits.
In the blog post earlier in the day, Mr Armstrong said that Coinbase remains “well capitalised” and that “crypto isn’t going anywhere” despite the turmoil that has gripped the market over recent months and the collapse of high profile operators within the industry including FTX.
Coinbase had total US dollar assets of $5.6 billion (€5.2 billion) at the end of September last year, including $5 billion (€4.7 billion) in cash and cash equivalents, according to a shareholder letter published at that time. The company has not provided an update about its revenue or financial performance since then.
Mr Armstrong said that Coinbase will also be “shutting down several projects where we have a lower probability of success”.
“In 2022, the crypto market trended downwards along with the broader macroeconomy. We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion,” Mr Armstrong said.
A look ahead to 2023
What will 2023 have in store for the economy, the media landscape and the tech sector? Ciarán Hancock is joined by Irish Times business journalists Eoin Burke-Kennedy, Ciara O’Brien and Laura Slattery.
“Coinbase is well capitalised, and crypto isn’t going anywhere. In fact, I believe recent events will ultimately end up benefiting Coinbase greatly (a large competitor failing, emerging regulatory clarity, etc), and they validate our long term strategy. But it will take time for these changes to come to fruition and we need to make sure we have the appropriate operational efficiency to weather downturns in the crypto market, and capture opportunities that may emerge.”
Mr Armstrong said all team members affected by the decision to cut 25 per cent of Coinbase’s workforce, amounting to some 950 jobs, will be informed today.
Coinbase Ireland, the Irish arm of the company which has its main European office in Dublin, employed some 117 people in 2021, accounts filed late last year indicated, after embarking upon a hiring spree that doubled the exchange’s Irish operations from the previous year.
The filings showed that Coinbase Ireland generated turnover of €64.5 million last year, an increase of 550 per cent from 2020, in line with a broader peak in the overall crypto market, which was valued at $2.5 trillion (€2.4 trillion) in May 2021.
However, crypto assets have tumbled since then, wiping an estimated $2 trillion off the broader industry’s market cap in the space of 18 months.
In a report attached to the Irish accounts, the directors of Coinbase Ireland said the company was profitable in 2021 due to revenue generated through providing support services and e-money integration to affiliate entities.
[ Bankman-Fried pleads not guilty in FTX fraud caseOpens in new window ]
They said that although the Irish entity “does not hold crypto assets directly”, its “operating results are dependent on crypto assets and the broader cryptoeconomy”.
As such, the directors said that “due to the highly volatile nature” of the sector, Coinbase’s “operating results will continue to fluctuate significantly” and it is difficult for the company to forecast growth trends accurately”.
Founded in the US in 2012, Coinbase allows users to buy and sell crypto assets such as bitcoin and ethereum. It received an e-money licence from the Central Bank of Ireland in 2019, entitling it to provide electronic payment services and handle electronic payments for third parties.
In December, the company was also received virtual asset service provider (VASP) authorisation from the Central Bank, bringing its operations under its supervision for the purposes of anti-money laundering and criminal financing regulations.
