Is Coinbase Dodging the WARN Act? Inside the 700 Cryptic Performance-Based Job Cuts

Last updated on June 1st, 2026 at 05:27 am

In May of 2026, Coinbase announced its intention to reduce its workforce by around 700, which represents around 14% of the total, across all geographic locations. CEO Brian Armstrong explained that the move is a restructuring in the “artificial intelligence era,” due to “lower trading volumes and volatility in the crypto market.” But as information started to trickle in, a question arose from labour lawyers and former employees alike: Is Coinbase trying to avoid the laws it has to follow under the federal WARN Act by calling the program “performance-based”?

What the WARN Act Actually Requires

The Worker Adjustment and Retraining Notification (WARN) Act is a U.S. Labor law that requires private employers with 100 or more full-time employees to give at least 60 days’ written notice before they implement a mass layoff or plant closing. But the law kicks in when 500 or more employees are laid off at one site (or 50-499 of the workforce if that is 1/3 or more of the area’s workforce).

Employers who do not comply with this requirement are subject to severe consequences: back pay and benefits to each of the affected employees shall be deemed to be owed for each day of the violation. Other states have more stringent ‘mini-WARN’ laws that have lower thresholds and longer notice periods (up to 90 days) and cover a wider range of employees, complicating compliance even further in states such as California, where Coinbase has a strong presence.

The “Performance” Framing Under a Microscope

The Coinbase termination — which the company says will be mostly completed by the end of Q2 2026 — will cost the company between $50 million and $60 million in severance and restructuring costs, according to Reuters. Those who are impacted by the change in the U.S. will be provided a minimum of 16 weeks of base pay, two more weeks for every year they have served, equity vesting and six months of healthcare coverage.

So, those are nice and generous terms, on paper, anyway. However, the framing is of huge significance under the WARN Act. A performance-based termination is when the company considers an employee’s job loss to be a result of his performance, as opposed to part of a business-driven mass layoff, and this could be a reason why the company argued that a legally protected “mass layoff” event did not occur. This is the type of classification that regulators and courts have been looking at in other high-profile Coinbase WARN Act controversy cases throughout the tech industry, critics say.

AI Restructuring or Mass Workforce Reduction?

In a statement made public, Armstrong said that the development of artificial intelligence is allowing for smaller teams of people, including non-technical, to write code and automate tasks without his help. Coinbase’s move to cut employees was indeed more about re-aligning for AI-driven productivity, according to Clear Street analyst Owen Lau.

However, the economic background is another issue. Trading activity on digital asset exchanges plunged in April 2026 after a widespread decline from the October trading highs of the crypto markets. According to Daniel T. Fannon, who is an analyst at Jefferies, the second quarter was “on a softer footing”. As observed by Nic Puckrin, co-founder of Coin Bureau, Coinbase stock underperformed compared to its trading volumes and it was due to the uncertainty of stable coin interest under the Clarity Act that has hurt the business.

Labour lawyers pay attention when the logic of the business and logic of law become so far apart.

What Pattern to Watch Out For With Crypto Companies Laying Off Employees May 2026

It’s not only Coinbase laying off employees, but a pattern seems to be developing around crypto firms laying off employees in 2026, similar to how it’s playing out throughout the entire crypto industry, where the firms are considering changing how things have been done as it’s tough to trade post-peak time due to regulatory and expensive cost structure issues. But as the crypto industry has been seeing massive layoffs, the term performance-related reshuffle has come under greater regulatory scrutiny.

The final number of Coinbase employees impacted by the cuts could be the deciding factor in whether or not the layoffs constitute a formal WARN Act violation, as authorities with the Labour Department decide on how many workers to include, and whether the “performance” classification will hold legal water. In California and New York, the State agencies are particularly aggressive in their claims for WARN Act violations against tech companies that restructure at scale but do not comply with the 60-day notice period.

What Employees Should Know

So, for those who fell victim to this round of Coinbase layoffs, a real issue may be whether they deserve advance warning or if they even have the means to take some action about it. The severance package being offered may be part of the reason that many of the affected workers are not expected to file complaints, since it is above the market.

However, industry watchers and labour advocates say that giving employees generous severance doesn’t equal doing the WARN Act. The notice provisions in the law are separate from what the companies are going to pay out — and that’s important for workers, families and the communities they rely on.

But the Coinbase case could prove to be a litmus test for how, and if, labour policies catch up with the industry’s fast-paced cycles, as other crypto firms continue to lay off workers this month in May 2026.

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