Coinbase, Block-Fi, Crypto.com to lay off hundreds amid crypto slump
Yahoo Finance Live anchors discuss bitcoin dropping below $21,000 as well as Coinbase, Block-Fi, and Crypto.com as they look to lay off hundreds of employees.
Video Transcript
BRAD SMITH: We are still watching the crypto market closely as prices continue to plummet. We just learned that Coinbase is laying off workers, along with BlockFi and Crypto.com, as there seems to be no relief in sight for this crypto winter. And let's put some of these layoffs in context here. 18% of their workforce for Coinbase, that equates to about 1,100 employees, and they're looking to get down to 5,000 employees at the end of this.
And this is coming as companies like PayPal, like Square, like Coinbase, like Robinhood, all of those that have exposure to crypto in one form or the other, either as a platform or on the form of their balance sheet, they have to now look across their cost structure to understand, OK, do we have enough of our own leverage ability within crypto at this point in time and within our finances to keep the same headcount on board, or even to whether this crypto winter in broad strokes, if you don't see the clients continue to chime in, and in the course of buying, over the course of this time too.
JULIE HYMAN: The answer is no.
BRAD SMITH: Right.
JULIE HYMAN: It's pretty simple that it's no. We've been getting this answer from these firms, and it's just a matter of who's going to be early and who's going to be late, you know, which is difficult to decide. Brian Armstrong, the CEO, is saying in a blog post, sort of laying out the rationale for this, "We appear to be entering a recession after a 10-plus year economic boom. A recession could lead to another crypto winter and could last for an extended period." Now, many of the folks we've talked to have said the crypto winter is happening already.
It's not that it could lead to it. We're in it already. We've heard a lot from the sort of VC side of things, that this is a good time for investment in crypto-linked and blockchain-linked technology. But that doesn't mean it's going to be good for crypto trading, of course. On the flip side of that, he sort of defends them and says, we've lived through crypto winters before. Living and living well, I suppose, are two different things.
BRAD SMITH: The stage of living.
BRIAN SOZZI: There's no other-- there's no light way of putting this. I think what Brian put forth today is BS. Here's a guy who was at the Milken Conference earlier this May talking about getting to 1 billion crypto users, striking a bullish, optimistic tone. And he's had to walk all this stuff back. And I think the word of the morning here-- and we were just talking with Brian about it. He brought up a very good term-- credibility.
Brian Armstrong, the CEO and co-founder of Coinbase, he has no credibility here today. He essentially got 18% of his workforce fired because he invested so aggressively in an expansion that has just-- that has not come to fruition yet, especially as crypto prices come down here and fall across the board. And it's good to see, at least, I think, some of these board members on Coinbase perhaps push Brian to just take a more rational view of the long-term future of Coinbase. I'm pointing to Kelly Kramer. That is the former-- she's on that Coinbase board. She's the former longtime CFO of Cisco.
Perhaps she got in the ear of Brian. You have Marc Andreessen on that board, I think also pushing Brian to look more rationally at the future for Coinbase. This had to happen. But realistically, it didn't have to happen if he took a more measured approach to running his business. This guy is a billionaire. Net worth for $2.2 billion net worth, according to "Forbes." He's a billionaire and predicted the future of the business, and he really missed by a wild mile.
JULIE HYMAN: I mean, people talking big in crypto is not unusual. People who are more measured in crypto are the exception rather than the rule. I probably would put Sam Bankman-Fried of FTX to some degree in that category.
BRIAN SOZZI: But he has-- Sam hasn't been just outlandish. Sam, I would say--
JULIE HYMAN: No, that's what I'm saying.
BRIAN SOZZI: Yeah, absolutely.
JULIE HYMAN: That's my exact point.
BRIAN SOZZI: Hats off to Sam.
JULIE HYMAN: That's my exact point. I have to mention MicroStrategy as well and Michael Saylor, who has been very, very outspoken as a Bitcoin maximalist. Those shares continue to move lower this morning because of this perception and because of commentary from the company that once Bitcoin falls to 21,000, they could fall victim to a margin call. Now, Mark Palmer of BTIG, who we're going to speak to later in the program, has defended MicroStrategy, and saying, this is a little bit misunderstood, the impact of that margin call, if it does come to pass.
So we're going to get him to sort of explain his rationale behind that. But certainly the perception in the market is that MicroStrategy and some of its peers, who have Bitcoin on the balance sheet, are very, very vulnerable in this environment.
BRAD SMITH: Yeah. It triggers the question-- what's worse, having the margin call on Bitcoin or having a Luna tattoo? Well, that's up for debate.
JULIE HYMAN: [LAUGHS]
