| From: Glenn Petersen | 5/17/2022 6:46:32 AM | | | | | | Coinbase slows hiring to help weather market downturn
by Ryan Weeks
The Block
May 17, 2022, 3:04AM EDT · 2 min read
Cryptocurrency exchange Coinbase has reined in a plan to triple its headcount this year in response to turbulent market conditions.
Emilie Choi, Coinbase’s president and chief operating officer, said in a blog post on Tuesday that the firm would be slowing hiring to “reprioritize our hiring needs against our highest-priority business goals.” The note had been circulated among staff earlier.
“Heading into this year, we planned to triple the size of the company. Given current market conditions, we feel it’s prudent to slow hiring and reassess our headcount needs against our highest-priority business goals,” she said. “Headcount growth is a key input to our financial model, and this is an important action to ensure we manage our business to the scenarios we planned for, specifically the potential adjusted Ebitda we are aiming to manage to.”
The news comes with crypto markets in turmoil following last week's spectacular collapse of TerraUSD (UST), the crypto industry’s third-largest stablecoin. Major cryptocurrencies across the board are down, with bitcoin dropping below $30,000 last week for the first time this year.
Shares in Coinbase — which went public via a direct listing last year — have also taken a beating, dropping to new lows last week after its earnings report for the first quarter underwhelmed. The stock closed at $61.70 on Monday, an 80% slide from its first day as a public company in April 2021.
In her note, Choi said that “now is the time to ensure we are fully integrating all recent hires — so we can ensure that they are successful at Coinbase.”
“Big picture: We know this is a confusing time and that market downturns can feel scary. But as we said at last week’s Town Hall, we plan for all market scenarios, and now we are starting to put some of those plans into practice,” she continued. “We’re in a strong position — we have a solid balance sheet and we’ve been through several market downturns before, and we’ve emerged stronger every time.”
Coinbase slows hiring to help weather market downturn (theblockcrypto.com) |
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| To: Glenn Petersen who wrote (68) | 6/5/2022 7:38:24 AM | | From: Glenn Petersen | | | | Coinbase Freezes Hiring and Will Rescind Accepted Job Offers
The crypto crash and fears of a Crypto Winter have prompted Coinbase to get even more aggressive in cutting costs.
By Andrew Hayward
Decrypt
Jun 2, 2022
3 min read
In brief
-- Posting a $430M loss in Q1 2022, Coinbase will "take more stringent measures" in hiring.
On the same day that rival crypto exchange Gemini confirmed layoffs, Coinbase announced today that it will continue its hiring freeze amid a tumultuous recent market for both cryptocurrency and tech stocks. Furthermore, the firm will rescind some job offers for employees who had accepted positions but had not yet started working.
Coinbase first announced plans in May to slow hiring, but today’s blog post from L.J. Brock, Coinbase’s chief people officer, confirms that the company will take a more severe turn.
“As these discussions have evolved, it’s become evident that we need to take more stringent measures to slow our headcount growth,” Brock wrote. “Adapting quickly and acting now will help us to successfully navigate this macro environment and emerge even stronger, enabling further healthy growth and innovation.”
According to Brock, the freeze will include not only new, unfilled positions, but also backfilling existing empty roles in the company. There’s an exception for “roles that are necessary to meet the high standards we set for security and compliance, or to support other mission-critical work.”
Furthermore, Coinbase will pull some accepted offers for incoming employees who have yet to start.
Brock wrote that it is “not a decision we make lightly,” but that Coinbase sees it as “necessary to ensure we are only growing in the highest-priority areas.” The firm said that there will be limited exceptions and that all affected people will be notified today.
Brock added that the move is “not a reflection on the highly talented people we had extended job offers to,” and that the firm will offer severance to those with rescinded offers as well as help them find jobs elsewhere in the industry.
The announcement comes less than a month after Brock had promoted the fact that Coinbase was hirig.n
In May, Coinbase posted a $430 million loss for Q1 2022 after missing analysts’ predictions on both profit and revenue for the quarter. Coinbase’s stock price is down more than 40% over the last month alone at a current price of under $74 per share.
“We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways,” Brock wrote today. “If we’re flexible and resilient, and remain focused on the long term, Coinbase will come out stronger on the other side.”
As mentioned, Gemini announced this morning that it will lay off 10% of its staff to prepare for a “crypto winter” ahead. In late April, crypto and stock trading app Robinhood laid off 9% of its staff as growth slowed. Crypto markets have seen extreme volatility in recent weeks, with the price of top crypto Bitcoin down 21% over the past 30 days.
Coinbase Freezes Hiring and Will Rescind Accepted Job Offers - Decrypt
Crypto Winter Layoffs Hit Hard—But Won’t Kill the Industry
Big crypto companies like Coinbase, Gemini, Bitso and more are battening down the hatches. Will they emerge from it leaner and stronger?
By Daniel Roberts
Decrypt
Jun 4, 2022
3 min read
If you don't think we're in Crypto Winter yet, consider these headlines from the week: Gemini laid off 10% of its staff; Coinbase instituted a hiring freeze and rescinded accepted job offers; Mexico's largest crypto exchange Bitso laid off 10% of its staff; and Argentina-based crypto exchange Buenbit laid off 45% of its staff.
The news is bad. And if you're an engineer who got a letter from Coinbase canceling a job offer you already accepted, there's no silver lining here. It's enough to make someone sour on working in the crypto industry at all.
But if you zoom out, there's reason not to panic.
Those calling this period the end of crypto (and there are so many saying it) clearly weren't in this industry in 2018. During that time, in which Bitcoin tanked 70% after peaking at $20,000, I kept hearing the same refrain from crypto execs and entrepreneurs I'd welcome on Yahoo Finance live shows: "We're putting our heads down and building now." It was difficult not to scoff at that talking point back then, because what else could they say? But many of the tools and platforms built during that time became the key success stories of the pandemic-prompted crypto boom in 2020 and 2021. They really did build things.
This is why it's reasonable for Dan Held, a Bitcoin O.G. who sold his price app ZeroBlock to Blockchain.com in 2013 long before he was a Twitter influencer with 600,000 followers, to declare that this Crypto Winter will be milder than past winters.
Held joined me for a chat at CoinMarketCap's virtual conference last week and said people are now going back "from HODL to BUIDL... The original Bitcoin ethos was all about building. Back in the early era, everyone had their own side project because they needed to go build something to make the ecosystem better. ... Now we've got A-players across all of tech wanting to come build things in the crypto ecosystem, we've got VC funds raising tens of billions of dollars in aggregate to go deploy into this ecosystem, so I don't think this winter is going to be as harsh as the other ones."
Another crucial point about this Crypto Winter is that non-crypto tech stocks aren't faring any better right now. Pandemic darlings Peloton (PTON) and Zoom (ZM) are down 60% and 40% this year, respectively. How about those once-hallowed FAANG names? Facebook ( changing its stock ticker to META next week) is down 45% this year, Amazon (AMZN) is down 28%, Apple is down 20%, Netflix (NFLX) is down 68% (goodness gracious), and Alphabet (GOOG) is down 22%.
No matter what, rescinding job offers is a terrible look, and Coinbase's reputation will now take yet another P.R. hit. But companies often have to cut head count during downturns—it's what they do to survive. When other large companies make job cuts (like in March 2020) the media reaction is not to declare their industry dead. But crypto, in the big scheme of things, is still so new (even after 13 years for Bitcoin) that skeptics still insist the entire thing could collapse.
It will not.
Crypto Winter Layoffs Hit Hard—But Won’t Kill the Industry - Decrypt |
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| From: Glenn Petersen | 6/14/2022 10:03:23 PM | | | | | | Coinbase lays off 18% of workforce as executives prepare for recession and ‘crypto winter’
PUBLISHED TUE, JUN 14 20228:15 AM EDT
UPDATED 28 MIN AGO
Kate Rooney @KR00NEY
CNBC.com
KEY POINTS
--mCoinbase will cut 18% of full-time jobs, according to an email sent to employees Tuesday.
-- CEO Brian Armstrong pointed to a possible recession, a need to manage costs and growing “too quickly” during a bull market.
-- “We appear to be entering a recession after a 10+ year economic boom,” Armstrong says. “While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”
Coinbase is laying off almost a fifth of its workforce amid a collapse in its stock and crypto prices.
The cryptocurrency exchange will cut 18% of full-time jobs, according to an email sent to employees Tuesday morning. Coinbase has roughly 5,000 full-time workers, translating to a head count reduction of around 1,100 people.
Shares of Coinbase closed down .83%.
CEO Brian Armstrong pointed to a possible recession, and a need to manage Coinbase’s burn rate and increase efficiency. He also said the company grew “too quickly” during a bull market.
“We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period,” Armstrong said in the email, adding that past crypto winters have resulted in a significant decline in trading activity. “While it’s hard to predict the economy or the markets, we always plan for the worst so we can operate the business through any environment.”
Coinbase had initially said it was pausing hiring. Two weeks later, the crypto giant announced that it was extending the freeze for the “foreseeable future.” Earlier this year, Coinbase said it planned to add 2,000 jobs across product, engineering and design.
“Our employee costs are too high to effectively manage this uncertain market,” Armstrong said. “While we tried our best to get this just right, in this case it is now clear to me that we over-hired.”
The news comes during a deep rout for Coinbase shares. The stock went public via a direct listing last April during a boom in crypto markets and investors clamoring for high-growth tech stocks. Coinbase’s shares are down 79% this year and 85% from the all-time high. Meanwhile, bitcoin has dropped to near $22,000 and has lost 53% of its value this year.
San Francisco-based Coinbase reported a slump in users in its last quarter and a 27% decline in revenue from a year ago. The company gets the majority of its top line from transaction fees, which are closely tied to trading activity.
President and Chief Operating Officer Emilie Choi called it a “very difficult decision for Coinbase” but given the economic backdrop, she said it “felt like the most prudent thing to do right now.”
Affected employees received a notification from human resources. If so, the memo was sent to a personal email as Coinbase cut off access to the company systems. Armstrong called it the “only practical choice” given the number of employees with access to customer information, and a way to “ensure not even a single person made a rash decision that harmed the business or themselves.”
Coinbase employees will have access to a talent hub to find new jobs in the industry, including Coinbase Ventures’ portfolio companies. Choi said Coinbase would still be “doubling down” on areas like security and compliance and may be “reorienting” employees to near-term revenue drivers.
“If there are any cuts to new product areas, it’s going to be more around experimental venture areas that we’re still very bullish on, but that we don’t want to invest in in this part of the cycle,” Choi told CNBC in an interview at the company’s headquarters.
“We will continue to invest in incredible innovative areas of crypto that we think are emerging over the longer term, but we’re probably going to do those in a more measured way in this type of an environment.”
Coinbase joins dozens of other tech and crypto companies slamming the brakes on hiring. Crypto lender BlockFi said Monday it was cutting 20% of its employees. Open-source tracker Layoffs.fyi estimates that more than 5,500 start-up and tech jobs have been cut in June alone.
Coinbase’s intention is “that this is a one-time event,” Choi said adding that the company has $6 billion of cash on the balance sheet. The company has lived through multiple bear markets in crypto before, also known as “crypto winters.”
“We will power through any macro environment, any crypto winter, or anything that’s coming,” she said. “The reality though, is that we have to adjust when we feel that there’s a very dynamic economic environment in play.”
Tech companies have been fighting low morale and attrition as their stocks get slammed. Last week, a petition posted to a decentralized publishing platform called for the removal and a “vote of no confidence” regarding several Coinbase executives, including Choi.
Armstrong called attention to the since-deleted petition, and in a Tweet urged employees to quit if they don’t believe in the company.
“We will always encourage our employees to share feedback internally on how we operate as a company — and we have a number of mechanisms in place for them to do so. It’s very much unclear if this document came from within the company,” Choi said. “However, if it did, we’re disappointed that those behind it felt the need to breach the trust of the company and their co-workers by sharing this information in a way clearly designed to drive controversy rather than a meaningful dialogue.”
Coinbase has no plans to offer additional company equity grants, or cash compensation amid the price drop, Choi said. The company offers annual grants, partially so employees could “mitigate the swings” and volatility in crypto. For employees and investors, the COO likened it to Amazon or Tesla: a long-term investment with volatility in the meantime.
“We think that anyone who makes an investment, whether they’re an employee or investor, will have a handsome return over the longer term,” Choi said. “Coinbase is a long-term play — we have very deep conviction in the long-term value of the stock.”
Coinbase lays off 18% as execs prepare for recession, 'crypto winter' (cnbc.com) |
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| To: Glenn Petersen who wrote (70) | 7/20/2022 11:02:12 AM | | From: Glenn Petersen | | | | Coinbase says it has no exposure to collapsed crypto firms Celsius, 3AC and Voyager
Published Wed, Jul 20 202210:42 AM EDT
Ryan Browne @Ryan_Browne_
CNBC.com
Key Points
- Coinbase said in a blog post that it had "no financing exposure" to collapsed crypto firms Celsius, Three Arrows Capital and Voyager Digital.
- The firm did, however, make a "non-material" investment in Terraform Labs, the Singapore-based company behind failed stablecoin project Terra.
- Coinbase shares climbed more than 13% Wednesday.
Coinbase reported a 27% decline in revenues in the first quarter as usage of the platform dipped.
Chesnot | Getty Images
Coinbase on Wednesday said it had no counterparty exposure to collapsed crypto firms Celsius, Three Arrows Capital and Voyager Digital, seeking to allay fears about the impact of a liquidity crisis on its business.
The U.S. crypto exchange also said it had "no financing exposure" to the firms, which each collapsed into bankruptcy after a plunge in digital token prices set off a cascade of liquidations in highly-leveraged positions.
Coinbase says it did, however, make a "non-material" investment in Terraform Labs, the Singapore-based company behind failed stablecoin project Terra, through its venture capital arm.
"Many of these firms were overleveraged with short term liabilities mismatched against longer duration illiquid assets," the company said.
"We have not engaged in these types of risky lending practices and instead have focused on building our financing business with prudence and deliberate focus on the client."
Coinbase shares climbed more than 13% Wednesday. The stock has erased about 70% of its value since the start of 2022, as higher interest rates from the Federal Reserve shook investors in both crypto and stocks.
The crypto market has been in a state of disarray ever since the demise of Terra, a so-called "algorithmic" stablecoin that tried to maintain a $1 value using code.
This led to liquidity issues at Celsius and Three Arrows Capital, or 3AC, two companies that made risky crypto gambles using borrowed funds.
As cryptocurrencies started falling this year, investors wanted to take their funds out of firms like Celsius and 3AC. But a drop in the value of the assets held by such companies meant they were unable to process those redemption requests.
As a result, Celsius, Voyager and others halted withdrawals, before eventually filing for bankruptcy protection.
Bitcoin climbed above the $23,000 mark Wednesday, for the first time in over a month, alongside a broad recovery in crypto prices. The world's top digital coin is still down roughly 50% year-to-date.
Investors are hoping the Fed will be less aggressive than feared with an expected hike in interest rates next week.
Central banks are racing to tame runaway inflation with tighter monetary policy, but this has spooked stocks and other risky assets — crypto, included — which benefited from a flood of stimulus during the Covid pandemic.
cnbc.com |
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| To: Glenn Petersen who wrote (71) | 8/4/2022 3:50:13 PM | | From: Glenn Petersen | | | | Coinbase shares soar in boost from meme traders, BlackRock crypto deal
Published Thu, Aug 4 20229:25 AM EDT
Updated Moments Ago
Tanaya Macheel @tanayamac
CNBC.com
Shares of Coinbase soared Thursday after the crypto exchange announced a partnership with BlackRock that will allow its institutional clients to buy bitcoin.
Coinbase shares were last up by 9%. Earlier in the day they jumped as much as about 40%.
Services in the company's Prime offering will be available to clients of BlackRock's portfolio management platform for institutional investors, Aladdin, the company said on its blog. Coinbase will provide crypto trading, custody, prime brokerage and reporting capabilities. BlackRock is the largest asset manager in the world with more than $8 trillion under management.
The ticker COIN also became one of the most mentioned names Thursday on Reddit's WallStreetBets chat room, topping GameStop's popularity in the online forum, according to alternative data provider Quiver Quantitative.
"Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets," Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, said in a statement. The partnership will let them "manage their bitcoin exposures directly in their existing portfolio management and trading workflows."
That interest is a beacon in the night for the crypto community. The industry has suffered a slew of hacks and breaches, including attacks on Solana and Nomad this week alone. Crypto has also gone down with the broader sell-off in risk assets and is further handicapped by the financial contagion that stemmed from the Terra collapse in the spring. Many investors maintain that institutional adoption is key to increasing the maturation, stability and price of bitcoin and perhaps the broader crypto market.
Coinbase shares have been on a tear lately and analysts have not been sure why. The stock jumped 20% on Wednesday. The shares were still down nearly 70% for 2022 through Wednesday's close.
The unusual jump in Coinbase this week could be related to investors who were betting against the stock scrambling to cover their short positions, a so-called short squeeze. More than 22% of Coinbase's shares which are available for trading are sold short, according to FactSet. So as the stock has run, these investors have to buy back the shares to cover their losses, further fueling the gains.
Despite the doom in the market and decline in Coinbase's share price, Citi on Thursday called it the "fizzle before the sizzle" and said it's on the lookout for a stock reversal over the next three months.
"There are some good developments brewing," analyst Peter Christiansen said in a note to investors, citing potential stablecoin regulation and Ethereum's long-awaited transition to proof-of-stake.
— CNBC's Yun Li contributed reporting.
cnbc.com |
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| From: Glenn Petersen | 8/6/2022 2:57:40 PM | | | | | | The Humbling of Coinbase
In just over a year, the United States’ largest cryptocurrency exchange went from a triumphant public offering to a “crypto winter” of cost cutting and layoffs.
By David Yaffe-Bellany and Mike Isaac
New York Times
Aug. 5, 2022
Brian Armstrong, the chief executive of the largest cryptocurrency exchange in the United States, traveled across the world to make an announcement in early April: Coinbase was bringing crypto to India.
In an auditorium in Bangalore, Mr. Armstrong, wearing a type of loose buttoned shirt popular in India, said Coinbase planned to set up a hub of 1,000 employees there by the end of 2022. The company was investing in Indian start-ups and allowing local customers to buy and sell digital currencies on its exchange. For Coinbase, it was a chance to transform finance in a country of more than one billion people and lure new customers from across Asia.
“Namaste,” Mr. Armstrong declared. “We come with humility and respect.”
But that week, Coinbase got some bad news. A government-backed group issued a statement suggesting that the company would be unable to use a crucial payments platform — a system that was supposed to allow Coinbase customers to convert their rupees into virtual currencies like Bitcoin and Ether. Not long after its grand opening, Coinbase halted much of its trading service in India.
Coinbase rose to prominence as one of the first major crypto companies, a gateway to the chaotic world of digital assets for amateur investors. But as it has grown from plucky start-up to publicly traded company, its status as an industry leader has been threatened by a series of missteps and a steep decline in the crypto market over the last six months.
Coinbase’s fumbled start in India, a largely untapped market for crypto, was emblematic of failures that have unsettled employees and sent the company’s stock price spiraling. In June, Coinbase laid off 18 percent of its staff.
For years, Coinbase has aspired to become the Google of crypto, as some employees put it, a world-changing business with global reach and a wide range of products. Instead, the company is at risk of squandering its head start, as nimbler competitors like FTX and Binance continue expanding despite the downturn, according to interviews with crypto experts and 23 current and former Coinbase employees.
“It’s become a bit of a chaotic situation for them,” said Dan Dolev, an analyst at the financial firm Mizuho who tracks Coinbase. “It’s the perfect storm.”
Some insiders attribute Coinbase’s problems partly to strategic missteps by executives Mr. Armstrong tapped to turn the company into a crypto juggernaut. As crypto prices surged, Coinbase hired thousands of new employees, which led to overspending and bloat.
Some recruits came from Silicon Valley titans like Google and Meta, including top executives. Now employees say the company is unrecognizable from the one that dominated the early years of crypto, with some leaders who lack deep experience in the industry.
Despite its early start, Coinbase has never had a strong hold over the international market, which is dominated by Binance. The company went into India despite widespread uncertainty about how the government would react, an approach that industry experts considered unwise.
Then, in the spring, Coinbase unveiled its most-hyped product of the year, a marketplace for nonfungible tokens, the digital collectibles known as NFTs. But the marketplace failed to draw much interest and was criticized by NFT aficionados.
Not all of Coinbase’s recent struggles are of its own making. The steep decline in crypto prices has led to a drop in trading, which accounts for the vast majority of the company’s revenue. As the largest crypto company on the public market, Coinbase bears the brunt of the broader industry’s problems, with its stock price fluctuating in parallel with Bitcoin and other volatile cryptocurrencies. (The company got a boost this week when it announced a partnership with BlackRock, the world’s largest asset manager. Its stock was up almost 5 percent at the close of trading on Thursday.)
Mr. Armstrong declined to be interviewed. But five of his top executives defended the company’s performance. In a series of interviews, they said Coinbase was developing an array of crypto products, some of which may take time to catch on, and emphasized that the company had weathered past downturns.
Emilie Choi, the chief operating officer, said Coinbase’s business model — in which trading fees keep the company running while other projects develop — resembled the approach of major tech companies like Meta, which relies on ad dollars to fund longer-term bets.
“The way that we operate is the way we’re always going to operate,” Ms. Choi said. “A long-term focus on the future.”
Coinbase was founded in 2012 by Mr. Armstrong and Fred Ehrsam, a former Goldman Sachs trader who now runs a crypto investment firm. In an industry rife with fraud, Coinbase established a reputation as a safe, easy-to-use platform for buying and selling crypto. But as the business grew, Mr. Armstrong’s leadership sometimes drew internal dissent: In 2020, Black employees complained about discriminatory treatment.
In April 2021, Coinbase went public at an $86 billion valuation, making Mr. Armstrong one of crypto’s wealthiest executives. The company became a household name, known for its memorable Super Bowl ad featuring a bouncing QR code.
But as Coinbase grew, some employees worried that it wasn’t doing enough to compete with FTX and Binance in the international market, especially with American regulators contemplating a crackdown on the industry.
In 2019 and 2020, Coinbase executives discussed opening an international hub in Singapore, according to three people familiar with the talks. The company recognized the need to compete with Binance by offering a wider array of tokens, as well as derivatives trading products prohibited in the United States, the people said. But the project never came to fruition.
More recent efforts at international expansion have foundered. In India, Coinbase said it would plug into a popular, government-backed payments system called Unified Payments Interface. But shortly after Coinbase’s announcement, the National Payments Corporation of India, a public-private group that runs U.P.I., tweeted that it was “not aware of any crypto exchanges using UPI.”
Soon Coinbase cut off access in India; local customers can still use the exchange to trade one type of crypto for another, but they can’t buy digital assets with traditional currency. In an earnings call in May, Mr. Armstrong said the company had faced “informal pressure” from the Indian authorities.
“Our preference is really just to work with them and focus on relaunching,” he said.
The fanfare of Coinbase’s launch struck others in the crypto industry as foolish. In private discussions with the industry, Indian regulators had suggested that they were cautious about appearing to openly endorse crypto, according to someone involved in the talks, and would prefer for companies to take a more measured approach.
Coinbase “overestimated the government’s potential support,” said Prasanto Roy, a technology policy consultant in India. “It went overboard.”
In an interview, Nana Murugesan, a Coinbase executive who oversees international expansion, said the company had gone into India despite the uncertainty because it wanted to clarify the country’s regulatory posture.
“Action produces information,” Mr. Murugesan said. “We want to learn from this information and drive our decision making and next steps.”
Over the years, Coinbase has tried to expand in other ways, creating a suite of products and services. Still, in the first quarter of 2022, nearly 90 percent of its revenue came from trading fees.
Coinbase started work on the NFT marketplace last year, with a team that eventually grew to about 30 engineers, designers and other employees. Mr. Armstrong hyped the project, saying NFTs “could be as big or bigger” than Coinbase’s cryptocurrency business.
But the development of the marketplace was a painful process, slowed down by disagreements about what the product should look like and what kinds of customers it should target, according to three people familiar with the situation. The project was spearheaded by Sanchan Saxena, a recent recruit from Airbnb, who envisioned an Instagram-style site built to showcase users’ NFT collections. Some employees who worked on the marketplace were skeptical that the idea would catch on, two of the people said, since NFT traders have often treated the items as vehicles for speculative bets rather than as digital art.
Coinbase hoped to unveil the marketplace in the first quarter of 2022, Mr. Saxena said in an interview. But it was delayed until late April. By that point, the broader NFT market had cratered: Sales were down more than 80 percent from the fall.
After its release, the marketplace got scathing reviews. In the last week of July, it generated about $24,000 a day in trades; its main competitor, OpenSea, which serves as a kind of eBay for NFTs, generated 600 times that amount.
Mr. Saxena said the Instagram-style approach was aimed at creating the type of crypto community that exists on sites like Twitter and Discord.
“We are still pursuing this product. We’re not going to throw in the towel,” he said. “We could have done a better job of explaining probably that, ‘hey, our focus is web3 social first and foremost.’”
In the 18 months before the crypto market crash, Coinbase’s staff more than quadrupled in size, to 6,100 from 1,250. (A spokesman said the company had “put a huge emphasis” on hiring employees with strong crypto backgrounds, especially in key product development roles.)
But as Coinbase grew, projects started to feel overstaffed, and the decision-making process slowed amid layers of bureaucracy, according to five people familiar with the company. Longtime employees were concerned that new hires felt “rudderless,” one person said, and joked that you could tell the length of someone’s tenure at Coinbase by the number of times the new recruits came to them asking for help.
Even the Super Bowl ad nearly didn’t come together: As the game approached, Coinbase hadn’t settled on an idea, and employees discussed the possibility of selling back the airtime, according to two people familiar with the matter.
The bloat was especially severe on Coinbase’s customer-service team. New staff members often felt that they didn’t have enough to do. “I got maybe four phone calls a day for a while,” said David Visini, a customer-service employee who was laid off. “It was dead, dead, dead.”
Ms. Choi, the chief operating officer, acknowledged that Coinbase had “overhired” during the pandemic and said it was difficult to integrate new recruits in a remote environment.
“I don’t know that we had exactly the right set of tools to set them up for success,” she said.
The crypto market crashed in May, causing Coinbase’s stock price to fall about 60 percent. In the first quarter, Coinbase’s revenue dropped 27 percent from a year earlier, to $1.17 billion, even as its expenses more than doubled, to $1.72 billion.
Its competitors appear to be faring better. Sam Bankman-Fried, chief executive of FTX, said in an email that his financial results had been “ballpark similar” to last year, when the company recorded profits of roughly $350 million. Binance, the largest exchange in the world, declined to reveal revenue figures. But in June, the company’s founder and chief executive, Changpeng Zhao, announced that he was hiring for 2,000 open positions.
That month, Coinbase employees circulated a petition demanding the ouster of several top executives. Mr. Armstrong responded aggressively on Twitter, calling on disgruntled employees to quit. But at a staff meeting, he and other executives struck a more conciliatory note, saying that employees should keep faith in crypto, and that the company would emerge stronger from the tumult, according to two people who attended.
A few days later, the company laid off 1,100 employees.
nytimes.com |
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| From: Glenn Petersen | 8/9/2022 6:41:18 PM | | | | | | Coinbase shares drop on billion-dollar loss in second quarter and revenue miss
Published Tue, Aug 9 20224:25 PM EDT
Updated 1 Min Ago
Jordan Novet @jordannovet
CNBC.com
Key Points
- Coinbase's revenue declined almost 64% in the quarter as cryptocurrency prices fell.
- The exchange operator lowered its full-year forecast for transacting users.
- Coinbase said during the quarter it was trimming 18% of headcount.
Coinbase shares dropped in extended trading on Tuesday after the crypto exchange reported a loss of over $1 billion in the second quarter and missed analysts' estimates for revenue.
Here's how the company did:
- Earnings: Loss of $4.98 per share, vs. loss of $2.65 per share as expected by analysts, according to Refinitiv.
- Revenue: $808.3 million, vs. $832.2 million as expected by analysts, according to Refinitiv.
Coinbase's revenue declined nearly 64% as investors exited the crypto market after last year's dramatic run. Retail transaction revenue came in at $616.2 million, down 66% and below the $667.1 million consensus among analysts polled by StreetAccount.
Coinbase reported a $1.1 billion net loss, compared with $1.59 billion in net income in the same quarter last year, according to a letter to shareholders. One factor was a $377 million non-cash cryptocurrency-related impairment charge. Coinbase's own cryptocurrency assets at the end of June were worth $428 million, down from about $1 billion at the end of March. Over 40% of the cryptocurrency assets were in Bitcoin.
"Q2 was a test of durability for crypto companies and a complex quarter overall," the company said in the letter. "Dramatic market movements shifted user behavior and trading volume, which impacted transaction revenue, but also highlighted the strength of our risk management program."
The company said it had 9 million monthly transacting users during the period, down from 9.2 million in the first quarter but more than the 8.7 million StreetAccount consensus. Macroeconomic and cryptocurrency credit resulted in lower trading volume during the quarter, the company said.
It was a challenging quarter for Coinbase from an operational perspective.
Cryptocurrency controversies helped to push down prices in what some called a "crypto winter." Coinbase's stock tumbled 75% during the second quarter, while the price of Bitcoin plunged by about 59%. Coinbase said it was extending its hiring freeze into the foreseeable future and cutting 18% of headcount. Bitcoin accounted for 31% of transaction revenue in the quarter, the highest level since the first quarter of 2021, while 22% of transaction revenue was associated with Ethereum.
Assets on platform fell quarter over quarter to $96 billion from $256 billion, mostly because of pressure on cryptocurrency prices, Coinbase said.
"While we did see net outflows in Q2, we observed that the majority of this behavior was institutional clients de-risking and selling crypto for fiat as opposed to withdrawing their crypto to another platform," Coinbase said in the shareholder letter. "As a result, our market share of the total crypto market capitalization declined to 9.9% from 11.2% in Q1."
Coinbase updated its outlook for the full year. It now expects 7 million to 9 million monthly transacting users, down from a range of 5 million to 15 million three months ago. Management said it expects average transaction revenue per user in the low $20 range, rather than pre-2021 levels.
To reduce marketing spending, the company is doing less with paid media and incentives, while pursuing ways to attract non-paid traffic. And it reduced its forecast for technology, development and general and administrative expenses to $4.0 billion to $4.25 billion from the $4.25 billion to $5.25 billion range a quarter ago. That includes optimizing infrastructure spending.
"Of course, we don't control the macroeconomic factors or downturn," CEO Brian Armstrong said on a conference call with analysts. "We don't really even control the crypto market more broadly, right. So what do we control? Well, obviously we can focus on building great products for our customers. We can focus on staying on the forefront of crypto technology to make sure that we're creating compelling use cases and making those available to our customers. We can focus on our expense management in down markets and frankly we can ensure that we just don't get distracted or disillusioned by short-term thinking.
"So I believe that the work we're doing today to develop and innovate new products and tools is going to make us really well situated to capture disproportionate share in the next up cycle."
Coinbase shares declined almost 11% in Tuesday's regular trading session.
cnbc.com |
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| From: Glenn Petersen | 11/20/2022 9:00:39 PM | | | | | | Edward Snowden Calls Coinbase Over-Compliance ‘Toxic and Embarrassing’
The former NSA contractor turned whistleblower criticized the exchange for favoring compliance over its customers' interests.0
By André Beganski
Decrypt
Nov 20, 2022
4 min read
Edward Snowden Talks Tornado Cash Sanctions, Ethereum Merge, DAOs and NFTs at Camp Decrypt 2022In an extensive talk with Decrypt's Dan Roberts at Camp Decrypt in Napa CA in October, Edward Snowden gave his candid views on the Ethereum merge, the sanctioning of Ethereum mixer Tornado Cash by the U.S. government, the privacy shortcomings of Bitcoin and Ethereum, and his view on using DAOs to source tips from whistleblowers.
As society went from dial-up modems to near-constant online presence via smartphones, the ways in which individuals engaged with networks underwent a pivotal shift. The internet became not only a place for people to access vast amounts of information and connect with others, but also an avenue for corporations and governments to harvest swaths of information.
Edward Snowden says that this shift away from the internet’s roots was partly a result of corporations that didn’t put their users first.
“We lost that internet because we onboarded billions of people, and the people who were providing the gateways for that didn’t have their best interests at heart,” he said in an intimate, fireside chat before 75 attendees of Camp Decrypt in Napa Valley last month.
The former NSA contractor turned whistleblower, known for revealing an unlawful mass surveillance program in the U.S. in 2013, said he sees a similar trend emerging when it comes to the adoption of cryptocurrencies.
Snowden compared the way cryptocurrency exchange Coinbase onboards users to the way Facebook became synonymous with social media.
“We’re seeing people exploiting the kind of ignorance that made so many people now think tapping the Facebook app on your phone [is] the internet, and now think crypto is Coinbase or something else equally horrible as that,” he said.
Coinbase is the only publicly listed cryptocurrency exchange in the U.S. and the country’s leading exchange by volume, according to CoinGecko. The company reported it had 8.5 million monthly transacting users on average in its third fiscal quarter of this year, a 16% increase from the same period a year ago.
Snowden told Camp Decrypt attendees that Coinbase has put regulatory compliance over the founding ideals of blockchain-based networks—an innovation that could tilt power back into the hands of internet users.
“To those of you in the room who work for Coinbase, it’s really nothing personal, you’re just an example of [the] overly compliant, overly indulgent,” he said. “Yeah, you guys still get rich, you’ll make a lot of money, but have you actually advanced the interests of society?”
Coinbase claims to have prioritized regulatory compliance since its earliest days, and the company has asserted that working with regulators is key to widespread acceptance for cryptocurrencies as an asset class.
“We’ve always believed that for crypto to gain the legitimacy needed for mainstream adoption, compliance can’t be an afterthought—it has to be core to the way we operate,” the company wrote in a blog post. “Compliance with existing regulatory frameworks isn’t an option—it’s a necessity.”
Snowden went on to compare Coinbase to a company that sells products much in the same way a home improvement retailer like Home Depot does, adding that its commitment to Know-Your-Customer (KYC) procedures—which helps them remain compliant with anti-money laundering regulations—is a drag on the crypto space.
“You're not even building lawn mowers, you're selling them, but great, you've popularized the lawnmower—lawnmowers are important, they're valuable,” he said. “But when I go buy a lawnmower, nobody asks for me to hold up my passport and scan my face, and the fact that you guys go along with that is frankly toxic and embarrassing.”
Snowden said that companies looking to bring individuals into the world of Web3 while also remaining compliant with regulations at the same time should do so in a way that doesn’t compromise the ideals that originally drove people to the industry.
“My plea to those of you who are in that big end of the pool is, if you're going to cave, cave strategically,” Snowden said. “Leave space for the protocol and for the sort of values that we're all supposed to be representing here.”
Coinbase has said that it has the same responsibilities as other large financial institutions when it comes to verifying customers who engage with the company and enforcing policies that prevent money laundering. Many of its compliance programs are modeled on retail banks.
The company explains that its compliance programs—which include monitoring the overall cryptocurrency market and detecting financial crime—are intended to protect its customers.
Snowden broadened his criticism to include any crypto exchange that keeps track of users’ funds.
“You don't want to be in a position where you can check that, because really, that's not your role in society, even if [the] government says it is,” Snowden said. “That's for police, that's for intelligence—that's their job, and their job is supposed to be hard.”
Coinbase did not immediately reply to a request for comment from Decrypt.
Edward Snowden Calls Coinbase Over-Compliance ‘Toxic and Embarrassing’ - Decrypt |
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| From: Glenn Petersen | 1/10/2023 7:28:27 AM | | | | | | Coinbase to slash 20% of workforce in second major round of job cuts
PUBLISHED TUE, JAN 10 20236:42 AM EST
Kate Rooney @KR00NEY
CNBC.co,
KEY POINTS
-- Coinbase is cutting a fifth of its workforce following an 18% staff reduction in June.
-- CEO Brian Armstrong pointed to recent pressure on the crypto sector thanks to “unscrupulous actors in the industry,” referring to bankrupt exchange FTX and its founder Sam Bankman-Fried.
Coinbase is cutting about a fifth of its workforce as it looks to preserve cash during the crypto market downturn.
The exchange plans to cut 950 jobs, according to a blog post published Tuesday morning. Coinbase, which had roughly 4,700 employees as of the end of September, already slashed 18% of its workforce in June citing a need to manage costs and growing “too quickly” during the bull market.
“With perfect hindsight, looking back, we should have done more,” CEO Brian Armstrong told CNBC in a phone interview. “The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”
Coinbase said the move would result in new expenses of between $149 million and $163 million for the first quarter. The layoffs, along with other restructuring measures, will bring Coinbase’s operating expenses down by 25% for the quarter ending in March, according to a new regulatory filing. The crypto firm also said it expects adjusted EBITDA losses for the full year to be within a prior $500 million “guardrail” set last year.
After looking at various stress tests for Coinbase’s annual revenue, Armstrong said “it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario” and there was “no way” to do so without reducing headcount. The company will also be shutting down several projects with a “lower probability of success.”
Cryptocurrency markets have been rocked in recent months following the collapse of one of the industry’s biggest players, FTX. Armstrong pointed to that fallout, and increasing pressure on the sector thanks to “unscrupulous actors in the industry” referring to FTX and its founder Sam Bankman-Fried.
“The FTX collapse and the resulting contagion has created a black eye for the industry,” he said, adding that there’s likely more “shoes to drop.”
“We may not have seen the last of it -- there will be increased scrutiny on various companies in the space to make sure that they’re following the rules,” Armstrong said. “Long term that’s a good thing. But short term, there’s still a lot of market fear.”
Cryptocurrencies have suffered alongside technology stocks as investors flee riskier assets amid a broader economic downturn. Bitcoin is down 58% in the past year, while Coinbase shares are off by more than 83%
End of a growth era
Coinbase joins a chorus of other tech companies cutting jobs after going on a hiring binge during the pandemic. Last week, Amazon said it would cut 18,000 jobs, more than the online retailer initially estimated last year, while Salesforce reduced its headcount by more than 7,000, or 10%. Elon Musk slashed about half of Twitter’s workforce after taking the helm as CEO last year, and Meta cut more than 11,000 jobs, or 13%. Crypto companies Genesis, Gemini, and Kraken have also reduced their workforces.
“Every company in Silicon Valley felt like we were just focused on growth, growth, growth, and people were almost using their headcount number as a symbol of how much progress they were making,” Armstrong said. “The focus now is on operational efficiency -- it’s a healthy thing for the ecosystem and the industry to focus more on those things.”
Early last year, Coinbase had said it planned to add 2,000 jobs across product, engineering and design. Armstrong said he’s now trying to shift the culture at Coinbase to “get back to its start-up roots” of smaller teams that can move quickly.
Coinbase went public in April 2021 and has seen its share price plummet since. The stock is trading below $40 after surging to $341 on its public debut. Coinbase debt that’s maturing in 2031 continues to trade at roughly 50 cents on the dollar. The company still had cash and equivalents of roughly $5 billion as of the end of September.
Coinbase said it would email affected employees on their personal accounts, and revoke access to company systems. Armstrong acknowledged the latter “feels sudden and harsh” but “it’s the only prudent choice given our responsibility to protect customer information.”
Despite the industry’s domino effect of bankruptcies and a marked drop in trading volume, Armstrong was steadfast in arguing that the industry isn’t going away. He said the demise of FTX would ultimately benefit Coinbase, as their largest competitor is now wiped out. Regulatory clarity may also emerge, and Armstrong said it “validates” the company’s decision of building and going public in the U.S. The CEO likened the current environment to the dot-com boom and bust.
“If you look at the internet era, the best companies got even stronger by having rigorous cost management,” he said. “That’s what’s going to happen here."
Coinbase to slash 20% of workforce in second major round of job cuts (cnbc.com) |
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| From: Glenn Petersen | 2/16/2023 6:06:33 PM | | | | | | Coinbase Says Client Assets Are 'Segregated and Secure' Following Proposed SEC Rule Change
Coinbase says it already provides the protections available to the clients of qualified custodians and supports the SEC’s proposal to require such protections.
By Will McCurdy
Decrypt
Feb 16, 2023
2 min read
Coinbase is confident that its Coinbase Custody Trust Co. (CCTC) will remain a qualified custodian even if new rules proposed by the SEC come into play, according the company's chief legal officer Paul Grewal.
Coinbase Custody Trust is a New York-based business that provides cold storage for third-party investors' digital assets. The SEC on Wednesday published a rule-change proposal that seeks to enforce much stricter provisions governing where registered investment advisers can custody cryptocurrency on behalf of their investors, limiting such investments to what are known as “qualified custodians.”
These custodians must adhere to a stricter set of regulations, including keeping funds in a siloed account, unmixed with their own funds or those of other organizations.
Coinbase’s Grewal told Decrypt that his firm supports the SEC's proposal and fully agrees that “investors deserve to feel confident their assets are safe.” Grewal added that its custodial clients' assets “are segregated and secured.”
“We commend the SEC for recognizing Coinbase Custody Trust Co. (CCTC) is a qualified custodian, and after today’s SEC proposed rulemaking, we are confident that it will remain a qualified custodian,” said Grewal.
Crypto industry cautious over custody
SEC Chair Gary Gensler didn’t mince words when it came to criticizing the practices of some crypto custodians.
In the proposal, Gensler said that “though some crypto trading and lending platforms may claim to custody investors’ crypto, that does not mean they are qualified custodians.”
Gensler said that certain platforms have commingled investor assets with both their own or other investors in the past, leaving these “investors in line at the bankruptcy court” when such platforms have gone bankrupt.
In the wake of FTX's high-profile collapse last November, which saw the crypto exchange mix user funds with its sister trading firm Alameda Research, investors have been on high alert regarding how trading platforms custody their assets.
One such development to cool investors' nerves has been the rise of reserve reports, with exchanges like Binance, KuCoin, ByBit, and others providing users with attestations as to how they manage their reserves.
Coinbase Says Client Assets Are 'Segregated and Secure' Following Proposed SEC Rule Change - Decrypt |
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