The Humbling of Coinbase

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.

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