If there is only one left, Coinbase hopes to be it. The digital asset exchange platform announced on Tuesday, January 10, a plan to cut 950 jobs, or about one-fifth of its workforce. This is the company’s second slimming down after an initial cut of 1,100 jobs in the summer of 2022 as the cryptocurrency galaxy battles for survival. Coinbase had become one of Wall Street’s stars when it went public in April 2021, with the stock reaching $429 in session. It is now worth ten times less and has a total capitalization of 8.7 billion dollars (8.1 billion euros).
The platform run by Brian Armstrong, 39, remunerated itself by charging high fees on the cryptocurrencies it held for its customers (about 0.5% per transaction). All of its revenues have collapsed with the drop in cryptocurrencies, but also the fierce competition between platforms (the first of them, Binance, announced in the summer that transactions were free, as is the case on the Stock Exchange in United States), the company’s excessive hiring and the mistrust against cryptocurrencies caused in November 2022 by the fraudulent bankruptcy of the FTX platform
“Coinbase is well capitalized and crypto is not going away”, however assures on his blog Mr. Armstrong, who seeks to reassure his troops, even if he will continue to lose money. “Dark times weed out bad business, as we are seeing right now. Better days are ahead, and when they do, we will be ready. »
A little background: bitcoin, the pioneer of cryptocurrencies, soared to $64,400 in November 2021, behaving like speculative value boosted by the free money policy of the Fed, the American central bank. Then, starting in 2022 and with the credit crunch, bitcoin experienced a slow crash, showing that this currency was neither stable nor secure, and had none of the digital gold touted by its followers. As early as June 2022, bitcoin fell below the $20,000 mark and continued to decline to stabilize around $17,300, its current price. Blockchain, the technology that allows cryptocurrencies to exist, has not resulted in the emergence of the new world promised by its proponents.
Resounding bankruptcies
This reflux has caused considerable losses of fortune, of more than 2,000 billion dollars according to the CNBC channel, for many holders of bitcoin but also of other cryptocurrencies. It has caused multiple bankruptcies, the most resounding of which is that of FTX, the platform of Sam Bankman-Fried, which is awaiting trial in New York. FTX executives had simply used their clients’ capital to speculate and ended up losing that money.
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