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Hao Jia was so confident in the promise of cryptocurrencies that he turned down a job offer from Oracle to work as a software engineer at Coinbase, one of the most popular crypto businesses. Jia, though, was one of several employees who received an email from Coinbase last week rescinding their job offers. Unfortunately for Jia, this meant losing his job and visa.
Coinbase has quickly changed direction after initially aiming to hire up to 2,000 new staff this year, citing “enormous product possibilities ahead.” Instead, the cryptocurrency exchange, which was once valued at nearly $100 billion, has withdrawn offers, imposed a recruiting freeze, and cut off 18 percent of its workers in recent days.
Coinbase CEO Brian Armstrong mentioned a potential recession and expansion that came “too rapidly” in a company-wide email issued Tuesday to staff announcing the mass layoff. Employees discovered they had been fired after being locked out of their work emails. “I understand that removing access will feel abrupt and unwelcome, and this is not the experience I intended for you,” Armstrong wrote.
Coinbase’s abrupt hiring reversal reflects a broader trend in the crypto business. To weather a possible extended slowdown in the crypto market and the broader economy, an increasing number of companies are laying off employees, causing a sensation of whiplash among the many employees who joined these businesses, believing that crypto was the next big thing.
Crypto.com CEO Kris Marszalek said in a tweet on Saturday that the Singapore-based exchange will be laying off roughly 260 employees, or about 5% of its staff. Gemini Exchange, another prominent exchange platform, said last week that it would be laying off 10% of its workforce. In addition, BlockFi, a cryptocurrency lending company, has also announced a 20% reduction in personnel.
The corporations have portrayed the cuts as necessary moves to handle a shift in economic conditions, citing concerns about rising interest rates and inflation in public pronouncements. This week, US stocks fell into a bear market. Fears of a recession are mounting both inside and outside the business. Bitcoin fell to a little around $20,000 on Wednesday, down from an all-time high of about $69,000 in November.
On the other hand, Crypto executives are still seeking to justify their faith in the market’s long-term prospects in some circumstances. Many crypto enthusiasts may point out that there have been big downswings in the past, including the 2018 Bitcoin meltdown and a fall in May 2021 that wiped away $1 trillion in market value in a week. However, cryptocurrency, according to some industry insiders, always rebounds back.
The brakes have been slammed on a fast-growing sector.
For many workers, the abrupt layoffs have been traumatic and have placed doubt on the industry’s future.
According to ManpowerGroup, a worldwide staffing organization, hiring in the crypto sector doubled between November and April, with Gemini and Coinbase being two of the top three employers. According to data from consultancy firm PwC, cryptocurrency startups raised $34 billion in capital globally in 2021, an eightfold increase over the previous year. Many people who were enticed to an industry that seemed like a rocket ship until recently are now wondering if and when the good days will return.
While some of the recently laid-off workers are engineers who may be in demand at other organizations, they are nevertheless facing the potential of finding new jobs when the tech sector is struggling. At a time when US businesses are laying off fewer people, IT and financial firms have seen an increase in layoffs. According to a survey by Challenger, Gray and Christmas, tech companies let off more than 4,000 individuals in May, up 781 percent from total layoffs from January to April. In addition, according to the research, employment layoffs in fintech companies increased by 268 percent.
Workers in other nations are also affected. For example, in response to the sinking markets, 80 staff at Bitso, one of the major exchanges in Mexico with over 4 million customers across Latin America, were laid off in late May. According to colleagues, many of the afflicted workers were new hires.
Binance is one prominent exception to the layoff pattern. Binance CEO Changpeng Zhao announced 2,000 new positions in a tweet on Wednesday, which appeared to be a dig at the spending of other crypto businesses like Coinbase and Crypto.com. “It was difficult to say no to Super Bowl advertisements, stadium naming rights, and huge sponsor deals a few months ago,” Zhao wrote in the announcement.