But last week, Jia was one of several employees who received an email from Coinbase revoking their job offers. For Jia, that meant not only losing a job, but potentially a visa as well.
“I’m an international student and I need to keep my visa,” he told CNN Business. “Now after Coinbase, I’d rather go to a bigger company because I’m worried about my visa.”
After initially planning to hire up to 2,000 more employees this year, Coinbase has abruptly changed course, citing “tremendous product opportunities.” In recent days, the cryptocurrency exchange, which was once worth nearly $100 billion, has withdrawn bids, imposed a hiring freeze and been fired 18% of its workforce.
In a company-wide email sent to employees on Tuesday announcing the mass layoffs, Coinbase CEO Brian Armstrong hinted at a possible looming recession and “too rapid” growth. Employees learned they had lost their jobs after locking themselves out of their work emails. “I realize removing access is going to feel sudden and unexpected, and that’s not the experience I wanted for you,” Armstrong wrote.
The sudden reversal in hiring numbers at Coinbase reflects a broader trend in the crypto sector. A growing number of startups are shedding staff to survive a possible prolonged downturn in the crypto market and the economy at large, creating a sense of whiplash among the many workers who have joined these companies with the belief that crypto is the next big thing is thing.
in one tweet saturday
, Crypto.com CEO Kris Marszalek announced that the Singapore-based exchange would lay off about 260 employees, or 5% of its workforce. Another major exchange platform, Gemini Exchange, announced last week that it would lay off 10% of its employees. And the blockfi crypto lending platform said
it is shedding about 20% of its workforce.
In public statements, companies have presented the cuts as necessary steps to respond to changing economic conditions amid concerns about rising interest rates and inflation. US stocks plunged into a bear market this week. Recession fears are growing inside and outside the industry. And cryptocurrencies, once seen as a hedge against the stock market and inflation, have also plummeted, with bitcoin falling from an all-time high of nearly $20,000 to just over $20,000 on Wednesday $69,000 in November.
“We appear to be entering a recession after more than 10 years of economic boom,” Armstrong wrote in his email to Coinbase staff. “A recession could lead to another crypto winter and last for a longer period of time.”
In some cases, however, crypto executives are still trying to redouble their belief in the market’s long-term potential. As many crypto believers will point out, there have already been notable downturns over the years, including the 2018 bitcoin crash and a May 2021 crash that wiped out a $1 trillion market value in a week. Some industry executives stress that crypto keeps bouncing back.
“Constraint is the mother of innovation and tough times are a compulsion to focus,” Gemini founders Cameron and Tyler Winklevoss wrote to employees. “The crypto revolution is well underway and its impact will continue to be profound. But its progression has been far from gradual or predictable.”
A fast-growing industry is hitting the brakes
For many workers, the sudden cuts were staggering and cast doubt on the future of the industry.
Hiring in the crypto sector has doubled between November and April, with two of the top three employers being Gemini and Coinbase, according to data from ManpowerGroup, a global staffing firm. According to data from consulting firm PwC, crypto companies raised $34 billion in funding globally in 2021, an eightfold increase from the previous year. Many employees drawn into an industry that until recently seemed like a rocket ship are now wondering if and when the good times will return.
“I was very, very happy when I got the job and now it’s like I’m mourning the loss,” said a graduate who recently had a job offer canceled by Coinbase, and who spoke on condition of anonymity, because he feared consequences for her career. Another Fast Coinbase employee who just graduated from college said, “My heart sank.”
While some of these recently laid-off workers are engineers who may be wanted by other companies, they still face the prospect of looking for new jobs at a difficult moment for the technology sector. At a time when US companies are shedding fewer employees overall, technology and fintech companies have been hit by a surge in job cuts. Technology companies laid off more than 4,000 employees in May, up 781% from the total Cuts from January to April according to a report by Challenger, Gray and Christmas. Fintech companies, meanwhile, saw a 268% increase in job cuts, according to the report.
The consequences for workers also extend to crypto startups in other countries. At Bitso, one of the largest exchanges in Mexico with over 4 million users across Latin America, 80 employees
were released in late May in response to falling markets. According to the employees, many of the affected workers were new hires.
Executives “are afraid of losing money and I totally understand that, but it shouldn’t be acceptable to hire someone and then fire them 40 days later,” Murillo Bargas, a laid-off Bitso employee, told CNN Business. “You should have seen this coming. The crypto winter is not new to anyone.”
“I was in a room with an employee who was hired a week ago, so he just did the onboarding stuff and then the next week he was fired,” Lucas Ferreira, a now former Bitso employee, told CNN Business.
“Our hiring decisions are made in the long-term interest of our business, to best support our customers and our strategy as a business,” a Bitso spokesman told CNN Business.
A notable exception to the layoff trend is Binance. Binance announced 2,000 job openings Wednesday in a tweet from CEO Changpeng Zhao, who appeared to question the spending of other crypto startups like Coinbase and Crypto.com. “A few months ago it wasn’t easy to say no to Super Bowl advertising, stadium naming rights and big sponsorship deals, but we did it.” wrote Zhao
in the announcement.
“We are entering this crypto winter from a position of strength, and there really is no way we would ever emerge from the crypto winter in a weaker position,” said Brian Shroder, CEO of Binance’s U.S. division. the job posting to CNN Business last week. “In the last three days alone, we’ve interviewed six people from Coinbase and Gemini.”
It is unclear when the crypto winter will end. “That’s the beauty of crypto: it literally ends next week, or we could be at it for over a year and more,” Shroder said.
CNN Business’ Allison Morrow and Jordan Valinsky contributed to this report.