Coinbase Shuts Chicago Office as Crypto Slump Continues
In May 2018, Coinbase opened an office in Chicago as part of an ambitious plan to expand its trading products and tap the city’s finance expertise. Less than a year later, the cryptocurrency company is abandoning those plans, and laying off approximately 30 engineers in the process.
In a statement on Tuesday, Coinbase said it would shut down the office and scale back plans to build a new “matching engine” product aimed at high-frequency trading.
“We have made the difficult decision to consolidate the matching engine efforts and thus wind down the matching engine team in Chicago. We will look to relocate a small number of Chicago-based matching engine employees to San Francisco,” said the company.
The layoffs come after a frenetic 2018 during which Coinbase tripled its employee headcount to around 800 people even as cryptocurrency prices and trading volumes declined dramatically.
In an interview with Fortune, a Coinbase spokesperson described the Chicago closing as a setback but said the company is still adding employees in other parts of its business. The spokesperson added that high-frequency trading is no longer a priority, and that Coinbase is focusing instead on building other new products. These include custody services and over-the-counter trading, both of which have launched in the last year.
The layoffs, which are effective immediately, come as the crypto industry is mired in a long-running slump following the bubble of 2017, which saw the price of Bitcoin brush $20,000 and digital currencies of all sorts soar to sky-high valuations.
After the bubble popped in early 2018, many cryptocurrencies fell over 90% in value, cutting deeply into the revenue of companies like Coinbase, which make most of their money from trading commissions. Even as the industry shows signs of recovery, with Bitcoin approaching $6,000 in recent weeks, Coinbase and others have been searching for fresh strategies and new sources of revenue.
San Francisco-based Coinbase also said it would maintain a remote sales force in Chicago, and continue to expand its offices in New York, London, and Portland.