Cryptocurrency exchange Coinbase Inc. is reducing its staff by 18% as part of a restructuring plan due to the beginning of a recession and the anticipated extended “crypto winter.”

“Today I am making the difficult decision to reduce the size of our team by about 18% to ensure we stay healthy during this economic downturn,” Chief Executive Brian Armstrong wrote in a blog post.

According to Armstrong, Coinbase grew too quickly in 2021, when the company had only 1,250 employees and crypto markets were in the midst of massive growth. During that year, bitcoin soared to its all-time high near $69,000. However, recently crypto markets have begun to tumble, with bitcoin dropping to nearly $22,200, down nearly 68%, according to CoinMarketCap.

“We appear to be entering a recession after a 10+-year economic boom,” said Armstrong. “A recession could lead to another crypto winter and could last for an extended period. In past crypto winters, trading revenue (our largest revenue source) has declined significantly.”

Coinbase shares are down almost 80% since the beginning of the year following the falling crypto market values, falling to $50 from $250 in January. This morning share prices rose about 1% during pre-market trading after the layoff news but fell again after trading opened to $50.40.

According to the company, this move will shave approximately 1,100 employees from its roster and leave about 5,000 remaining on its staff.

This news comes as little surprise after Coinbase extended its hiring freeze in early June and rescinded a number of already accepted offers.

Aside from poor markets, Coinbase has also had some poorly performing product launches this year. For example, its recently released Coinbase NFT marketplace had a meager first month after a massively hyped run-up and a huge waitlist.

According to DappRadar, the marketplace only transacted $1 million in sales from April 20 to May 20 across 5,446 transactions, while leading marketplace OpenSea managed $4.6 billion in sales volume over the same period.

The decision by Coinbase is part of a trend among other crypto companies that have announced hiring freezes and job cuts. They include the lending platform BlockFi, whose Chief Executive, Zac Prince, said on Twitter that the company would cut 20% of its workforce and crypto exchange Crypto.com, which announced layoffs of 5% of its staff, or about 260 employees.

Earlier in the month the Winklevoss twins, who co-founded the crypto exchange Gemini, also announced that the company would be laying off 5% of its personnel as well.

Photo: Coinbase