Coinbase stock is now down 80% from its IPO price and with the crypto market going taking a downturn, the company has decided to make adjustments to its hiring plans. Although the company initially planned to triple its size, it will now slow down its hiring process.
Coinbase Plans to Slow Down Its Hiring Efforts Despite Plans to Increase Company Size Threefold
As per Coin Market Cap, Coinbase is considered the third largest crypto exchange based on volume. The exchange has decided to change its decision to hire new employees "amid a market downturn."
The COO and president of Coinbase, Emilie Choi, wrote a post saying although they planned to increase the size of their company threefold, due to the "current market conditions," they have decided that slowing their hiring process would be prudent.
Company Plans to Slow Down Hiring to Better Reach Profitability Guidance Set for Investors
Choi also said that they have to reasses their headcount needs against the "highest-priority business goals." According to the story by Tech Crunch, The COO and president said that headcount growth remains the company's financial model's key input and slowing down their hiring rate would be important for the company.
The company notes that the slowdown is in order for them to be able to reach the profitability guidance that they have set for their investors. The news comes at a time where a lot of beating has happened in the broad crypto market.
Terra UST Stablecoin Collapse is the Highlight of the Crypto Market
Tech Crunch says that the beating was catalyzed by equity markets uncertainty as a whole along with a recent crypto incident, the collapse of the Terra UST stablecoin. To add, the stock of the company is now down by about 80% compared to its IPO price.
The publication also notes that the company has seen a decline in crypto trading volumes ever since the start of the year which makes up most of its revenue. To be more specific, the article noted that Coinbase "depends" on trading activity in order to get a large chunk of its revenue.
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Company CEO Clarifies What Could Happen in the Event of Coinbase Bankruptcy
Due to the decline in crypto trading volumes, the company's Q1 losses for this year totalled $430 million. Other controversies also followed the disclosure since it was reported that, should the company go bankrupt, shareholders could also lose deposited funds in the exchange.
Brian Armstrong, the CEO of Coinbase, clarified that the company is not at risk of bankruptcy. He did, however, say that although unlikely, it would still be possible for the court to consider "customer assets as part of the company in bankruptcy proceedings."
2/ We have no risk of bankruptcy, however we included a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties. https://t.co/lwmgb1kFtA
— Brian Armstrong (@brian_armstrong) May 11, 2022
This means that in the event of Coinbase going bankrupt, customer assets would be considered the property of Coinbase.
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This article is owned by Tech Times
Written by Urian B.
