Coinbase has been accused of having created a culture fraught with bullying, racism and discrimination against black people in a new exposé from the New York Times.
The report is based on interviews with 23 current and former Coinbase staff members as well as internal documents and recorded conversations.
The testimonies included in the story suggested that black Coinbase staff members had endured jokes about black stereotypes, being passed over for promotions and not having complaints about the allegedly toxic work environment taken seriously.
One example is a story about when a new office was opened in Portland. When it opened, black employees who had been working remotely for the company’s compliance team were told to relocate to the new location, according to the report. However, the one white member of the compliance team was allowed to continue to work remotely.
Kim Milosevich, a Coinbase spokesperson, told the New York Times that the white employee lived in Philadelphia and was allowed to commute to and work from the company’s New York office. She also said that Coinbase had offered relocation packages to staff members asked to move and that some who declined to move received severance.
All of the black workers in the compliance division ended up leaving the business.
Milosevich said that the FinTech company, which achieved a $8bn valuation after raising a $300m Series E round in 2018, “does not tolerate racial, gender or any other forms of discrimination.”
She added, “All claims of discrimination are treated very seriously, investigated by both internal and third parties, and the appropriate action is taken.”
Milosevich continued that the company had hired a consultant over the summer who looked at the company’s history and had found “no evidence of structural bias.”
The cryptocurrency exchange confirmed that it had recorded three official complaints between 2018 and 2019. Milosevich told the newspaper that the three complaints were investigated and found to be unsubstantiated.
Although, one complaint from one of the people the newspaper spoke with was not among the recorded complaints. The former Coinbase employee told the New York Times that she was never told how to make an official complaint.
Another former Coinbase employee, whose complaint was investigated, never found out what the result of the investigation was and that she never spoke with an investigator.
Overall, only 3% of Coinbase’s employees are black, according to data from the Bureau of Labor Statistics. While the figure has basically remained flat in recent years, companies like Square and PayPal have increased their share of black employees.
The New York Times reported that the tension within Coinbase’s ranks reached a boiling point this year after the killing of George Floyd sparked protests against racism worldwide.
Several companies have responded to the movement by launching new initiatives. For instance, Barclays has launched an accelerator to support black entrepreneurs and PayPal has committed $530m to supporting black and minority-owned businesses and communities across the US.
“For far too long, black people in America have faced deep-seated injustice and systemic economic inequality,” said Dan Schulman, president and CEO of PayPal, at the time of the announcement. “Black lives matter and we need to drive transformative change. We must take decisive action to close the racial wealth gap that sustains this profound inequity.”
As other businesses acted to support the black community, many black Coinbase employees told executives at Coinbase about their experiences at a meeting.
This resulted in a statement from Brian Armstrong, co-founder and CEO at Coinbase. He said that the company would revamp its diversity and inclusion plan and increase monitoring.
However, meeting things started to change after the meeting, according to a story in American Wired. During the next couple of weeks internal communication became more restricted and new guidelines were issued about how to discuss politics ahead of the upcoming presidential election.
Then, in September, Armstrong published a blog post that told staff to not discuss racial injustice whilst working and to focus on Coinbase’s mission.
“It has become common for Silicon Valley companies to engage in a wide variety of social activism, even those unrelated to what the company does, and there are certainly employees who really want this in the company they work for,” he wrote. “So why have we decided to take a different approach?
“The reason is that while I think these efforts are well intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division.”
Several tech investors praised the blog, including Union Square Ventures’ Fred Wilson, who is a Coinbase board member.
Armstrong then doubled down on his statement, offering severance packages for any employee who disagreed with the new direction. Staff were given one week to either get on with the programme or leave Coinbase.
And now, the New York Times has published a story full of testimonies from former employees.
Coinbase pre-emptively responded to the story by publishing an internal email as a blog.
The email started by saying that it was aware that the New York Times had spoken with several employees. “It’s now clear that the story will allege that several black employees had negative experiences at Coinbase over the last few years,” the email said.
It mentioned the reorganisation that asked employees to relocated to Portland. “The story will likely imply that black employees were discriminated against during this process; this is false,” the email said.
Coinbase added that, even though it usually doesn’t comment on “upcoming negative media stories”, the leadership believed that the topic and “because it may be read by your friends, family and professional contacts” prompted it to make an exception to the rule.
“As Brian shared with the ColorBlock ERG this morning, we don’t care what The New York Times thinks,” the email said. “The most important thing we care about is you, our employees, and what you think.”
The email then reiterated that it would take all complaints seriously and that Coinbase does not “accept intolerant behaviour.”
“In general, we should expect more, not less, media coverage (both positive and negative) as we grow. I’m sorry you’ll have to deal with these types of questions and comments again – I know it’s frustrating and distracting. Let’s keep focused on building an amazing company together,” the email said, before asking all employees who may have reporters reach out to them to redirect the journalists to the communications team
Coinbase became a Visa principal member in February 2020 and was one of the backers behind digital asset security infrastructure company Curv’s $23m Series A round in July.
Coinbase’s investement arm Coinbase Ventures also backed cryptocurrency exchange CoindDCX’s $2.5m raise this summer.
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