Coinbase cuts 1100 staff by sending emails to personal accounts, cutting system access

Coinbase logo and cryptocurrencies
It comes amid an ongoing drop in the value of cryptocurrency assets globally. Photo credit: Getty Images

Cryptocurrency exchange Coinbase has announced it's cutting nearly 1100 jobs - by sending affected staff an email to their personal accounts and cutting off their access to its systems.

Coinbase, which is available in New Zealand, made the announcement via CEO and co-founder Brian Armstrong, who sent a note to all staff telling them to expect an email about whether their jobs were safe.

It comes as cryptocurrency assets, including bitcoin, ether and many non-fungible token (NFT) collections, suffer major drops in value.

"Today I am making the difficult decision to reduce the size of our team by about 18 percent, to ensure we stay healthy during this economic downturn," Armstrong's note started.

The CEO said the accountability for the company's issues "rests fully with me", but that's likely to be of little comfort to the staff who now have no jobs.

Armstrong said there were three main issues that led to the decision to cut the workforce by nearly a fifth.

The first was the general economic downturn, which could "lead to another crypto winter" during which their revenue could decline significantly.

The second was around costs when markets were down, which required a "different mindset" compared to a growing economy.

Lastly, he admitted the company grew too quickly.

"At the beginning of 2021, we had 1250 employees. At the time, we were in the early innings of the bull run and adoption of crypto products was exploding," he wrote. 

"We saw the opportunities but we needed to massively scale our team to be positioned to compete in a broad array of bets.

"While we tried our best to get this just right, in this case it is now clear to me that we over-hired."

Perhaps the biggest slap in the face was the method by which those who lost their jobs would find out.

"If you are affected, you will receive this notification in your personal email, because we made the decision to cut access to Coinbase systems for affected employees," Armstrong wrote.

"I realise that removal of access will feel sudden and unexpected, and this is not the experience I wanted for you.

"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."

Armstrong said those laid off would get 14 weeks pay as severance as a minimum plus four months of health insurance.