Two days before the earnings report, one-seventh of the team was cut. Is the underlying story of the AI transformation AI itself, or the crypto winter?

Written by: ChandlerZ, Foresight News

On May 5, Coinbase CEO Brian Armstrong tweeted that around 14% of employees, approximately 700 people, would be laid off. In an SEC Form 8-K filed the same day, the company disclosed that it expects to pay $50 million to $60 million in severance and related costs, which will be recorded in the Q2 2026 financial report. Employees affected by the layoffs would have their access to company systems revoked on the same day, and U.S. employees will receive at least 16 weeks of base salary (plus two weeks for each additional year of service), the next equity vesting, and 6 months of COBRA health insurance.

After the announcement, Coinbase’s stock price initially rose by 4.2% in pre-market trading, but fell during regular trading hours, closing at $197.75, down 2.58% for the day.

Cancelling purely management positions, attempting "one-person teams"

In his tweet, Armstrong attributed the layoffs to the convergence of two forces: the cyclical fluctuations of the crypto market and the fundamental changes in work brought about by AI. However, the focus clearly lay on the latter throughout.

He stated that over the past year, he has witnessed engineers completing in days what used to take weeks for an entire team with the help of AI, and non-technical positions are already producing production-level code, leading to a significant automation of workflows. Based on these changes, he announced three transformations for Coinbase:

• The organizational structure would be compressed to a maximum of five layers below the CEO/COO, with a manager-to-subordinate ratio increased to over 1:15, reducing coordination costs associated with hierarchy.
• Purely management roles would be eliminated, requiring all managers to be strong individual contributors as well. Armstrong used the analogy of a "player-coach" to emphasize that leaders should perform their duties while also actively contributing.
• Formation of AI-native pods, even experimenting with "one-person teams," where a single employee would simultaneously take on the roles of engineer, designer, and product manager, relying on AI agent clusters to achieve multi-role outputs.

Armstrong characterized this restructuring with a radical metaphor, stating that Coinbase is being rebuilt from a company into an "intelligence" system, with humans aligning at the edge.

Q1 revenue expected to decline by 25%, layoffs two days before the earnings report

The narrative around AI is appealing, but the timing of the layoffs reveals more information.

Coinbase's Q1 2026 financial report will be released on May 7, just two days after the layoff announcement. According to CoinDesk, Wall Street is not optimistic about this quarter's expectations. The sharp decline in trading activity and falling token prices may hinder the performance of the upcoming first-quarter financial report, and several major investment firms have already downgraded their ratings for Coinbase and other platforms. Barclays noted that Coinbase's trading volume in March hit its lowest monthly total since September 2024, with no signs of improvement in April. The bank estimates that Q1 trading volume dropped by about 30% compared to the previous quarter.

Oppenheimer has revised its estimate for Coinbase’s Q1 trading volume from the previous $244 billion to $211 billion, now expecting total revenue of $1.48 billion, lower than previous estimates and market consensus.

Bitcoin fell 22% in Q1, while ETH dropped 30%, and global cryptocurrency exchange trading volume fell nearly 48% from the peak in October 2025 to $4.3 trillion in March 2026, marking a new low since October 2024. According to AInvest analysis, these layoffs can be seen as a cost-preemptive measure before the disappointing performance announcement, with a one-time restructuring cost of $50 million to $60 million recorded in Q2, reducing operational costs in subsequent quarters.

Bloomberg reported that Mizuho Securities analyst Dan Dolev stated that the crypto winter "might be the real reason behind most layoffs," with AI being more of a "convenient excuse."

This is not the first time Coinbase has significantly laid off staff during a market downturn; in June 2022, the company cut 18% of approximately 1,100 people; in January 2023, another 20% of around 950 people. Both rounds of layoffs occurred during the crypto winter. Armstrong at that time cited over-hiring and recession risks without mentioning AI. Three years later, the cyclical pattern of layoffs remains unchanged, but the framework of explanation has shifted to organizational evolution in the AI era.

The crypto industry collectively downsizes: Gemini cuts 30%, Block nearly half

Coinbase is not an isolated case; since 2026, there has been a wave of intensive layoffs in crypto and fintech companies.

Block (the parent company of Square) laid off over 4,000 employees in February, about 40% to 50% of its total workforce, with CEO Jack Dorsey specifically citing AI as the primary driving factor. Gemini has accumulated around 30% layoffs this year, reducing its total workforce to approximately 445 people, while closing its exchange operations in the UK, EU, and Australia, shifting its focus to the U.S. market and prediction markets. Gemini reported a net loss of $583 million in 2025, showing clear financial pressure behind the layoffs. Crypto.com cut 12% of its workforce in March, around 180 people, with CEO Kris Marszalek stating the company must act quickly to integrate AI. The Algorand Foundation laid off a quarter of its team, attributing it to macro uncertainties. OP Labs, Messari, and others have also announced layoffs within weeks.

A common characteristic of this wave of layoffs is that even companies with relatively healthy balance sheets are proactively cutting personnel and transitioning to AI-driven streamlined operational models. AI has become the most frequently mentioned keyword in layoff announcements.

80,000 people laid off, the "AI washing" controversy in Silicon Valley

The layoffs in the crypto industry are nested within a larger wave of layoffs in Silicon Valley. Statistics show that in Q1 2026, 86 technology companies laid off more than 80,000 people, more than doubling the approximately 30,000 people laid off during the same period in 2025. In late April, Meta and Microsoft collectively disclosed over 20,000 potential layoff positions. Data from March 2026 indicated that AI was cited as the primary reason for layoffs in the U.S., accounting for 25% of all layoffs.

However, this trend has also sparked criticism of "AI washing." OpenAI CEO Sam Altman publicly stated that almost every company that laid off employees cited AI, "regardless of whether it was actually due to AI."

Fortune magazine analyzed that during the pandemic, cheap capital flooded Silicon Valley, leading businesses to aggressively hire to meet surging demand and competition, causing disciplinary collapse. As interest rates returned to normal and growth slowed, the previously inflated workforce became unsustainable. AI provided a more palatable justification for layoffs in a technological narrative, but the underlying logic is cost correction.

For Coinbase, this judgment is particularly applicable. During the bull market from 2021 to early 2022, Coinbase rapidly expanded from about 2,000 to over 6,000 employees, and after experiencing two rounds of layoffs, it returned to around 5,000 employees. Cutting another 700 people in this round represents the third large-scale layoff in four years, with the mark of the cycle being deeper than that of AI.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。