Coinbase announced on Tuesday it plans to lay off 18% of its total workforce.
Employees were notified via their personal email after they were locked out of the work system.
The round of layoffs comes amid a historic crypto crash that has left traders scrambling.
About 1,100 Coinbase employees were notified that they had been laid off when they were unable to log into their work emails on Tuesday.
Coinbase CEO Brian Armstrong announced that the company eliminated about 18% of its total workforce in a blog post. The CEO of one of the world's largest cryptocurrency exchanges said the affected employees were notified via an email from HR to their personal account after the company decided to cut access to all Coinbase systems for the workers that had been terminated.
"I realize that removal of access will feel sudden and unexpected, and this is not the experience I wanted for you," Armstrong said in the blog post. "Given the number of employees who have access to sensitive customer information, it was unfortunately the only practical choice, to ensure not even a single person made a rash decision that harmed the business or themselves."
The cryptocurrency platform said in a regulatory filing that the workforce will be reduced to about 5,000 workers by the end of the second quarter of 2022. Earlier this month, the company began rescinding job offers via a mass email to employment candidates.
The news comes nearly a month after the cryptocurrency market began to plummet. Bitcoin has slid for nearly 12 straight weeks, dropping from highs near $50,000 to as low as $22,002 as of Tuesday morning. The crypto crash has caused traders to lose about $2 trillion since a peak in November, according to NBC News.
Coinbase stock dropped about 5% in pre-market trading following the news of more layoffs. The company is one of several tech ventures to initiate a series of sweeping job cuts in the US as CEOs and economists warn of an impending recession amid soaring inflation.
Armstrong said the decision was made as the result of concerns related to an impending recession that could lead to another crypto winter. He said workers who are laid off will receive a minimum of 14 weeks of severance.
The billionaire said the company over-hired in the beginning of 2021 and believes a workforce reduction will increase Coinbase's efficiency. Over the past year, the company hired about 3,200 new employees.
"We have now exceeded the limit of how many new employees we can integrate while growing our productivity," Armstrong said. "The actions we are taking today will allow us to more confidently manage through this period even if it is severely prolonged," he added.
The layoffs were announced the same day that JPMorgan downgraded the stock, citing the crypto market sell-off as well as Coinbase's hiring ramp up in 2022.
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