A ‘crypto winter’ freezes hiring at Coinbase and Gemini

Gemini is also cutting 10% of the company's workforce.

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Many CFOs believe putting Bitcoin on the balance sheet is too risky. Although cryptocurrency companies are accustomed to riding the wave of volatility, two announced on the same day that a “crypto winter” has resulted in hiring freezes, layoffs, and a rescinding of job offers. 

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Good morning,

Many CFOs believe putting Bitcoin on the balance sheet is too risky. Although cryptocurrency companies are accustomed to riding the wave of volatility, two announced on the same day that a “crypto winter” has resulted in hiring freezes, layoffs, and a rescinding of job offers. 

In a blog post on Thursday, Coinbase Chief People Officer L.J. Brock announced an extension of a “hiring pause for both new and backfill roles for the foreseeable future.” Brock said the company would “rescind a number of accepted offers.” Those who recently got a job at Coinbase will need a plan B.

Brock writes that the hiring pause began two weeks ago to assess hiring needs regarding the highest-priority business goals. But the company concluded it must take more “stringent measures to slow our headcount growth,” he explains. He notes that the move will help the company navigate the current macro environment.

In a new Fortune report, Coinbase made crypto history on the Fortune 500. Then disaster struck, my colleague Declan Harty takes a deep dive into one of the first cryptocurrency startups in the country that launched a decade ago.

Harty writes that Coinbase: Went on to become the first crypto unicorn, nabbing a $1.6 billion valuation in 2017. It was the first crypto exchange company to list on Nasdaq in 2021. And it was probably the first stop for your cousin, third-grade teacher, and maybe even your grandma when wading into the wild waters of crypto. It certainly was the first company in history to spend millions bouncing a QR code around the screen during a Super Bowl ad, a gambit that resulted in more than 20 million visitors jamming up the site. Oh, and as of this year, Coinbase is the first crypto company to join the Fortune 500. Coinbase is now the largest crypto exchange in the U.S. by trading volume. Its co-founder and largest shareholder, Brian Armstrong, commands a net worth teetering just under $3 billion.

But the past month has been nothing short of brutal. Harty writes: In mid-May, the company shocked Wall Street by announcing that its once voluminous profits had plunged to a $430 million loss. Monthly transacting users, the holy grail for measuring customer activity, fell from 11.4 million in the final three months of 2021 to 9.2 million, and the company expects that to fall further in the second quarter. The stock has plunged 73% year to date, from a high of $252 to around $67. You can read the complete report here.

Also, on Thursday, Gemini Trust Company, LLC, a U.S.-based cryptocurrency exchange, announced a hiring freeze. The company’s creators, twins Tyler Winklevoss and Cameron Winklevoss, wrote in a blog post they’re extending a hiring pause “for the foreseeable future.”

The path of crypto “can best be described as punctuated equilibrium—periods of equilibrium or stasis that are punctuated by dramatic moments of hypergrowth, followed by sharp contractions that settle down to a new equilibrium that is higher than the one before,” they write. “This is where we are now, in the contraction phase that is settling into a period of stasis—what our industry refers to as ‘crypto winter.’” In addition, “we have made the difficult but necessary decision to part ways with approximately 10% of our workforce,” they write. 

The crypto industry isn’t alone in cutting back on new hires. At least 68 tech companies tracked by layoffs.fyi have announced layoffs, including Better.com, Peloton, Netflix, Robinhood, Vroom, Doma Holdings, and Blend Labs, Fortune reported. Cutbacks or hiring freezes are taking place at Meta, Twitter, and Uber.

But there’s still a large number of employers in the U.S. that are hiring. There were 11.4 million job openings in April, slightly down from nearly 11.9 million in March, the U.S. Bureau of Labor Statistics reported this week. 

However, “If you are in a business where you’re going to start getting pinched because people are going to use you less because of the rise of interest rates by the Fed, you’ve got to cut costs,” Lawrence Harris, professor at the USC Marshall School of Business, recently told me.

It looks like the belt-tightening has begun.


Have a good weekend. See you on Monday.

Sheryl Estrada
sheryl.estrada@fortune.com

Upcoming event: Fortune’s inaugural in-person meeting of the CFO Collaborative, presented in partnership with Workday, will take place at Miller Union, Atlanta, on Wednesday, June 22, at 6:30 p.m. The featured speaker for the event will be Clint Watts, senior fellow at the Foreign Policy Research Institute and NBC News National Security Contributor. Watts will share his expertise on cyberterrorism, social media influence and Russian disinformation. The SEC is adopting new disclosure rules mandating that public companies report on material security breaches and their ability to manage cybersecurity risks. If you’re a CFO interested in attending, you can find the registration form here. For further information, please email CFOCollaborative@Fortune.com.

Big deal

PwC’s Global Workforce Hopes and Fears Survey 2022 found that as the Great Resignation continues, the share of companies taking internal steps to address the labor shortage is low. Just 40% of employees said their company is upskilling, and 26% said their employer is automating or enhancing work through technology. “Both numbers are low enough to imply considerable room for improvement,” according to the report. The findings are based on a survey of 52,000 workers across 44 countries and territories. 

Going deeper

In case you missed it, here’s what was featured in CFO Daily this week:

Are CEOs being richly compensated despite poor performance?

Buybacks vs dividends? In market downturns, the rules may change

Being the CEO’s strategic partner landed this Fortune 500 CFO the top job

Leaderboard

Michel Atwood was named CFO at Inter Parfums, Inc. (Nasdaq GS: IPAR), effective Sept. 6. Russell Greenberg, EVP and CFO, is retiring but will stay with the company full time until Sept. 30 to assist with the transition. Atwood was most recently VP of finance and Strategy at Estée Lauder. From 1995 to 2017, he held several executive positions with growing responsibilities at Procter & Gamble. Earlier, he was CFO of Global Markets at Prestige Fragrances.

Gregory J. Peterson, SVP and CFO at Southwest Gas Holdings (NYSE: SWX), has announced his intention to retire no later than October 2022. President and CEO Karen Haller will continue to work with Peterson as the company undertakes the process to identify his successor. Peterson has worked at Southwest Gas for more than 26 years in various leadership roles.

Ron Shelton has been appointed as senior VP, CFO, and treasurer at Navitas Semiconductor (Nasdaq: NVTS). Shelton was previously CFO at Adesto Technologies, a provider of application-specific semiconductors. Prior to that, he was CFO at GigOptix, Cirrus Logic, and other semiconductor companies. Shelton is currently a member of the board and an officer of Parabellum Acquisition Corp. (NYSE: PRBM), a blank-check company.

Colin Yee was promoted to CFO at Riot Blockchain, Inc. (Nasdaq: RIOT), a Bitcoin mining and hosting company, effective Aug. 15. Jeff McGonegal, current CFO, will move into a new role as senior advisor to Riot. Yee joined Riot in April 2022. He is currently head of corporate and financial operations. Yee was previously the CFO of a mid-market private equity firm specializing in renewable energy and infrastructure, the CFO of a publicly-traded real estate company in Canada, and most recently, the COO and CFO of a family office with controlling interests in companies focused on construction and geothermal systems.

Overheard

“If you look at the issues, this is no question a blow. She has had a massive impact. There will be a massive hole left by her departure.”

—Jefferies analyst Brent Thill commented on Yahoo Finance Live about Sheryl Sandberg stepping down as COO of Meta in the fall.