It is rarely good when a major life event occurs in a Taco Bell drive-thru.
But for Conner Hein, this was an especially gloomy dinner run. The University of Michigan grad was preparing to start his first job, at Coinbase — the crypto trading platform led by a humorous billionaire — when an email landed in his inbox last week that upended everything.
“We have made the very difficult decision to rescind your offer of employment,” read the letter, obtained by The Daily Beast from another source. “As such, you will no longer be starting with us on your previously agreed start date.”
Facing a brutal crypto market crash, Coinbase had decided to retract scores of job offers and extend a hiring freeze announced in mid-May.
‘I’m like,’ Well, my day just got 10 times worse, ‘Hein told The Daily Beast. “And then I sadly ate like six burritos.” (The 22-year-old Michigan native said he holds no ill will toward Coinbase’s “awesome” employees.)
On the heels of a devastating collapse in the price of Bitcoin and other cryptocurrencies this March, and amid fears of a coming recession, many crypto companies are making some painful cutbacks. Gemini, the crypto exchange started by the Facebook-famous Winklevoss twins, laid off 10 percent of its workforce last week, on the same day Middle East exchange Rain Financial canned dozens of employees.
But few collapses were as dramatic as that of Coinbase, which told more than 300 new recruits last week that they would not be getting the jobs they had been promised, according to a “talent hub” created by the company to help the ex-hires land new gigs. Many of the candidates had already quit their jobs at top banks and tech companies; others were foreign students dependent on the job for their visas.
Even worse, three former recruits told The Daily Beast the company had sent out letters just a week beforehand promising them that their employment was secure.
One rejected new hire called the abrupt reversal “pretty scummy,” adding that it potentially indicated “a catastrophic lack of planning” by the management team.
In a public statement, Coinbase said it “did not make this decision lightly,” but called the move a “prudent one given market conditions.”
“Two weeks ago, we paused hiring while we took time to reprioritize our hiring needs against our highest-priority business goals,” Chief People Officer LJ Brock wrote in a blog post the day the cuts were announced, adding that the company would offer a “Generous” severance package and career assistance to affected recruits.
“As these discussions have evolved, it’s becoming evident that we need to take more stringent measures to slow our headcount growth,” Brock wrote. “Adapting quickly and acting now will help us to successfully navigate this macro environment and emerge even stronger, enabling further healthy growth and innovation.”
But a former recruiter for the company told The Daily Beast that he was concerned about the company’s rapid hiring pace long before the market crash, calling its hiring targets “overly aggressive.”
The recruiter, who asked to remain anonymous for fear of professional repercussions, said the company was tripling its headcount every year — a breakneck pace he had never seen at another startup. (The company announced in its first-quarter earnings report that it had increased its staff by 33 percent this year.) The rapid growth resulted in “a lot of cracks” in the teams for which he was recruiting, the former employee said. adding that the environment was “pretty cutthroat.”
“It kind of made sense, the short-term downfall of the company, because I think they were going a little too gung-ho,” he added. “We were going a little bit crazy.”
Cryptocurrencies are especially volatile emerging market, and Coinbase was not the only crypto company to make painful sacrifices this month. Buenbit, a crypto exchange based in Argentina, recently laid off 45 percent of its staff, while Latin American exchanges Bitso and Mercado each laid off over 80 employees each.
And last week, the blockchain startup Wyre laid off more than a dozen employees— according to one person affected by the cuts — barely a month after it announced that it would be acquired by payment processing startup Bolt for $ 1.5 billion. “I just think it’s short-sighted and kind of dumb,” the former employee said.
Another axed worker told The Daily Beast that Wyre had been hiring people “like crazy” up until “like one day they decided to lay off those people.” The worker was miffed that he received just a few weeks of severance, far less than the Coinbase recruits.
“It seems a little unfair… Here I am, busted my ass for months, worked overtime like hell, and [was] promised a lot of things, ”he said.
In an email, Wyre cofounder and CEO Ioannis Giannaros said employees were paid severance based on tenure. He added that the company had hired rapidly to accommodate a dramatic increase in annual revenue but had recently fled scaling back.
Other tech companies like Twitter and Meta have also made cutbacks in the face of declining markets, with Twitter also rescinding some job offers last month. But the downfall of the crypto exchanges has been particularly striking given their extraordinary success run in recent years. The crypto market added some $ 1.5 trillion in value in 2021, and attracted more than $ 33 billion in venture capital. Coinbase alone generated $ 3.6 billion in revenue last year — up 11 percent from the year before — and became the first crypto company to enter the Fortune 500.
In May, however, amid a declining market and the crash of a so-called “stable coin,” the crypto market took a dramatic plunge, wiping out more than $ 300 billion in a single day. The price of Bitcoin — the oldest and most valuable of the currencies — sank below $ 27,000 for the first time in over a year, before leveling out at around $ 30,000.
Shares of Coinbase, which takes a cut of all trades on its platform, plunged along with the currencies, dropping 80 percent since November. The company also reported a $ 1.17 billion drop in revenue for the three months preceding March 31 — a 35 percent decline.
Some former Coinbase employees said the startup should have prepared for this kind of crash, given the crypto market’s volatility.
“The thing about Coinbase is that the failure or success of the company tracks perfectly to whether it’s in a bull or bear market,” one former employee told The Daily Beast. “This was always going to happen.”
She added: “I think anybody who didn’t see this coming is kind of fooling themselves.”
Current employees piled on in anonymous comments on the social media platform Blind, which verifies that users work at the companies they are posting about but otherwise keeps their identities hidden.
“Morale is in the toilet. About half of the employees would probably take a voluntary layoff offer at this point,” one employee wrote. Another lamented that the company management had “f-ed up with their cost estimate,” for new hires, though the user argued that rescinded recruits had been reasonably well taken care of.
Burned by their recruiting experience, some would-be Coinbase workers plan to stay as far away from the industry as possible. Ashutosh Ukey was one of the recruits left searching for a new company to sponsor his visa when Coinbase pulled the plug. He told The Daily Beast he was “straying a bit away… just until there’s less on the line personally for me.”
But others have maintained their loyalty to crypto, where the most zealous devotees have a near-religious belief in the technology.
“Every few years we go through the same cycle,” one laid-off Wyre worker said. “Maybe this is the end, and I guess I’ll be the one with the egg on my face… but I expect to see this turn around just like the others.”