Crypto winter has come, and Coinbase is in trouble

Illustration by Alex Castro / The Verge

Coinbase is pulling back on its hiring efforts. In a memo posted to Coinbase’s site, chief people officer L.J. Brock announced that Coinbase is putting a pause on hiring new employees, as well as rescinding several job offers already accepted by prospective workers, citing “current market conditions and ongoing business prioritization efforts.”

The shift comes as the cryptocurrency market continues to trend downwards, dragging the supposedly immovable stablecoins, which are pegged to a fiat currency or commodity, with it. Coinbase started to slow hiring in mid-May to make sure the company is “best positioned to succeed during and after the current downturn,” but this move halts hiring completely. Brock notes that the freeze will also affect backfills, or the employees hired to replace workers leaving the company. It excludes those hired to fill roles in “security and compliance,” however.

Coinbase is also contending with a lackluster response to the social NFT marketplace it launched widely in May. According to data from Dune Analytics viewed by The Motley Fool, 4,132 people purchased an NFT on the platform within 19 days of its launch, and gross sales amounted to $875,000, or an average of $46,000 per day. It doesn’t help that NFT sales are declining as a whole, dipping to about 19,000 sales per week at the beginning of May, as opposed to the 225,000 NFT sales made in September.

It’s unclear how many job offers Coinbase rescinded, and the company didn’t immediately reply to The Verge’s request for comment. Brock says affected individuals will benefit from Coinbase’s “generous severance policy” and will gain access to a talent hub with various career resources, including interview coaching, resume review, and networking opportunities.

The changeup at Coinbase has left some prospective employees struggling. At least two individuals set to be hired by Coinbase say they may lose their OPT (Optional Practical Training) Visa due to the rescinded offer. Others say they received an email reassuring them that they won’t lose their newly-accepted job due to the company’s hiring slowdown, only to receive an impersonal email notifying them of a rescinded offer weeks later.

“You may have seen this week that Coinbase posted an external blog post announcing our intentions to slow down hiring so that we can reprioritize our hiring needs against our highest-priority business goals,” Coinbase’s initial email to new hires reads. “First and foremost, I wanted to communicate that we are still extremely excited about having you join Coinbase and we will not be rescinding the offers of any employees who have already signed or have received an offer from us.”

Coinbase beefed up its staff as part of its plan to hire 2,000 employees in 2022, saying it foresaw “enormous product opportunities ahead for the future of Web3” at the time. Its most recent earnings report reveals that Coinbase added 1,218 employees in the first quarter of 2022 alone, bringing its total headcount to 4,948.

“While we did not make this decision lightly, it is the prudent one given market conditions,” Brock stated in the letter. “We will continue to evaluate all of our options to responsibly navigate Coinbase through the current cycle.”

Coinbase’s hiring freeze is an indication of chillier conditions for the cryptocurrency market, and so are the layoffs made at other companies on the blockchain. Cameron and Tyler Winklevoss, the twins behind the Gemini cryptocurrency exchange, also announced that they’re cutting 10 percent of staff. The same goes for Rain, a large crypto exchange based in the Middle East, which also laid off dozens of employees.

Last week, famed short-seller Jim Chanos called Coinbase “tremendously overvalued” on the Crypto Critics Corner podcast (via Fortune), and predicts the price of its stock will sit “in the mid-teens” by the end of this year. Coinbase shares dipped 9.7 percent after news of the hiring freeze went public on Friday.