US-based digital currency exchange, Coinbase has affirmed on easing back employing new workers in response to the ongoing market sector circumstance.
In a blog post published on Tuesday, Emilie Choi, Coinbase’s president and COO, said that the organization will slow down with hiring to enable them to reprioritize “hiring needs against our highest-priority business goals.”
While explaining the new decision, Choi noted that:
“The current market downturn has caused the company to reconsider its recruitment objectives for the year. This is an important step towards ensuring that we manage our company to the goals we set, particularly attempting to maintain Adjusted EBITDA.”
Early this year, the exchange had planned to triple its size. However, it has been severely affected by the recent market downturn, which probably stirred the development today.
Coinbase’s revenue and volumes drop
Coinbase recently announced that it incurred a loss of $430 million in the first quarter of 2022, and both the revenue and expenses dropped steeply. In Q1, the exchange revenue fell 35%, and trading volumes decreased to $309 billion from $547 billion. The exchange’s stock plummeted 75% year-to-date.
The poor outcomes have occurred at the same time as one of the worst price collapses in crypto history, which has shaved nearly $500 billion off the market capitalization.
The first quarter of 2022 was also marred by poor market conditions, which were compounded by worries of increasing prices and the outbreak of the Russia-Ukraine conflict. Economic activity was further hurt by COVID-related closures in China and Hong Kong.
No bankruptcy risk
Last week, the cryptocurrency exchange Coinbase reported a steep decline in trading volumes and revenues in its first-quarter results, which missed analysts’ expectations by a wide margin. The stock declined 23 percent following the announcement.
The dismal outcomes, coupled with anxiety over a regulatory filing that afternoon, prompted Coinbase’s CEO Brian Armstrong to declare on Twitter that the company had “no risk of bankruptcy.” His statement followed a fresh disclosure indicating clients might be held responsible for claims against the exchange, which alarmed Coinbase users.
The filing claims that “the crypto that Coinbase holds in custody for customers ‘could be subjected to bankruptcy proceedings, and such users could be treated as general unsecured creditors’.” As a result, users may perceive the platform to be more hazardous and less appealing, potentially jeopardizing its financial health.