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Hao Jia was so confident about the potentials of cryptocurrency that he turned down a job offer from Oracle to work as a software engineer at Coinbase, one of the most popular crypto firms. Jia was one of several employees who received an email from Coinbase last week rescinding their job offers. Unfortunately, that meant losing not only Jia’s work but also her visa.
Coinbase has abruptly changed course, claiming “enormous product possibilities ahead” as a reason for hiring up to 2,000 more people this year. However, the cryptocurrency exchange, which was once valued at nearly $100 billion, has recently canceled offers, put a hiring freeze in place, and cut off 18 percent of its workers.
Coinbase CEO Brian Armstrong cited a probable recession and expansion that came “too soon” in a company-wide email issued Tuesday to staff announcing the mass layoff. After being shut out of their work emails, employees discovered they had been fired. “I understand that the loss of access will feel abrupt and unwelcome, and this is not the experience I intended for you,” Armstrong wrote.
Coinbase’s abrupt hiring halt reflects a broader trend in the cryptocurrency industry. In order to weather a possible extended slump in the crypto market and the larger economy, an increasing number of startups are laying off employees, causing a sensation of whiplash among the many employees who joined these companies believing that crypto was the next big thing.
Crypto.com CEO Kris Marszalek confirmed the layoffs of around 260 employees, or 5% of the company’s workforce, in a tweet on Saturday. Last Monday, Gemini Exchange, another prominent exchange platform, stated that 10% of its employees would be laid off. In addition, BlockFi, a cryptocurrency lending platform, has announced a 20% reduction in staff.
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 their public announcements. This week, the stock market in the United States entered a bear market. Inside and beyond the business, fears of a recession are mounting. Bitcoin fell to slightly around $20,000 on Wednesday, down from an all-time high of about $69,000 in November, and cryptocurrencies, once supposed to be a hedge against the stock market and inflation, have also plummeted.
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 will point out that there have been big past downturns, including the 2018 Bitcoin meltdown and a fall in May 2021 that wiped off $1 trillion in market value in a week. However, cryptocurrency, according to certain industry executives, always recovers.
The brakes are slammed on a rapidly booming sector.
The abrupt layoffs have been upsetting for many employees, casting uncertainty on the industry’s future.
According to data from ManpowerGroup, a worldwide recruiting business, hiring in the cryptocurrency 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, up eightfold from the previous year. Many personnel who were attracted to a sector that seemed to be on fire until lately are now wondering if and when the good times will return.
While some of the recently laid-off employees are engineers who might 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 businesses in the United States are laying off fewer employees, tech and fintech firms have seen a boom in layoffs. According to research by Challenger, Gray and Christmas, tech companies laid off almost 4,000 individuals in May, up 781 percent over total layoffs from January to April. Meanwhile, according to the survey, job layoffs in fintech companies increased by 268 percent.
Workers in other nations are also affected by the impact. For example, in late May, 80 staff were laid off at Bitso, one of Mexico’s largest exchanges with over 4 million customers in Latin America, due to the market’s decline. According to colleagues, many of the impacted employees were new hires.
Binance stands out as an outlier in the layoff trend. Binance CEO Changpeng Zhao announced 2,000 open positions on Wednesday in a tweet that appeared to be a swipe at other crypto businesses like Coinbase and Crypto.com’s expenditures. “It was difficult a few months ago to say no to Super Bowl advertisements, stadium naming rights, and major sponsor deals,” Zhao wrote in the statement.