Coinbase, founded in San Francisco, grapples with internal crisis as 1,100 employees laid off - SFGATE

Coinbase, the notorious cryptocurrency exchange founded in San Francisco, appears to be grappling with an internal crisis of sorts as it deals with tech and crypto industry headwinds.

On Tuesday, the company announced that it would lay off 1,100 employees — nearly a fifth of its staff. It’s the final blow to the company’s rapid reversal of fortunes; after embarking on a mass hiring spree and a titanic Super Bowl ad earlier this year, the company paused hiring and reneged on already-accepted job offers.

But in an unfortunately routine staff email sent and publicly posted by Coinbase CEO Brian Armstrong spelling out the company’s too-rapid growth and the global economic downturn, one sentence stood out (and not just because it’s the top-highlighted quote on the layoff notice).

Armstrong explained that laid-off individuals would have access to all Coinbase systems cut off, and that they would receive the news in their personal emails.

“Given the number of employees who have access to sensitive customer information,” Armstrong wrote, “it was unfortunately the only practical choice, to ensure not even a single person made a rash decision that harmed the business or themselves.”

That part is less routine. It’s not common for CEOs to anticipate that any laid-off employees may sabotage the company on their way out, let alone allude to any concern of that in a public-facing message.

What could be the cause of that ill will?

Last Friday, a petition to remove chief operating officer Emilie Choi, chief product officer Surojit Chatterjee and chief people officer L.J. Brock with a vote of no confidence was leaked onto the tech forum Hacker News. In it, an anonymous list of employees expressed concerns that their decision-making has not been “in the best interests of the Company.” 

Among the poor decisions listed: The aggressive hiring (and rescinding of job offers), the proposal to rate employees after every interaction, a “generally apathetic and sometimes condescending attitude” from executives, and most damningly, “not being able to output any higher or better quality products and services despite aggressively hiring more employees.”

And rather than not respond — or respond to the gripes through internal channels — Armstrong badmouthed the people who wrote and publicly shared this in a 16-tweet thread, calling the petition "really dumb." (The authenticity of the note is unclear, but in his response, Armstrong legitimized the letter.)

“There is probably lots we can be doing better, but if you're at a place where you want to leak stuff externally then it's time for you to go,” wrote Armstrong in response. “You're hurting yourself and those around you.”

Commentators on the forum critiqued Armstrong for publicly dragging his workers, calling him "childish" and advising him to "listen to his own point." But more crucially, the concerns these employees listed were not entirely dissimilar to the ones that Armstrong listed as the factors that led to these mass layoffs.

"We would not be where we are today without your hard work and dedication to our mission," Armstrong wrote in his Tuesday announcement. "I am incredibly grateful for everything you have done to contribute to our success."

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Coinbase, founded in San Francisco, grapples with internal crisis as 1,100 employees laid off - SFGATE
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