Brian Armstrong, CEO of the largest cryptocurrency exchange in the United States, traveled across the world to make an announcement in early April: Coinbase was bringing crypto to India.

In an auditorium in Bangalore, Armstrong, wearing a type of loose buttoned shirt popular in India, said Coinbase planned to set up a hub of 1,000 employees there by the end of this year. The company was investing in Indian startups and allowing local customers to buy and sell digital currencies on its exchange. For Coinbase, it was a chance to transform finance in a country of more than 1 billion people and lure new customers from across Asia.

“Namaste,” Armstrong declared. “We come with humility and respect.”

But that week, Coinbase got some bad news. A government-backed group issued a statement suggesting that the company would be unable to use a crucial payments platform — a system that was supposed to allow Coinbase customers to convert their rupees into virtual currencies such as Bitcoin and Ether. Not long after its grand opening, Coinbase halted much of its trading service in India.

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Coinbase rose to prominence as one of the first major crypto companies, a gateway to the chaotic world of digital assets for amateur investors. But as it has grown from plucky startup to publicly traded company, its status as an industry leader has been threatened by a series of missteps and a steep decline in the crypto market over the past six months.

Coinbase’s fumbled start in India, a largely untapped market for crypto, was emblematic of failures that have unsettled employees and sent the company’s stock price spiraling. In June, Coinbase laid off 18% of its staff.

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For years, Coinbase has aspired to become the Google of crypto, as some employees put it, a world-changing business with global reach and a wide range of products. Instead, the company is at risk of squandering its head start, as nimbler competitors such as FTX and Binance continue expanding despite the downturn, according to interviews with crypto experts and 23 current and former Coinbase employees.

“It’s become a bit of a chaotic situation for them,” said Dan Dolev, an analyst at financial firm Mizuho who tracks Coinbase. “It’s the perfect storm.”

Some insiders attribute Coinbase’s problems partly to strategic missteps by executives whom Armstrong tapped to turn the company into a crypto juggernaut. As crypto prices surged, Coinbase hired thousands of new employees, which led to overspending and bloat.

Some recruits came from Silicon Valley titans such as Google and Meta, including top executives. Now employees say the company is unrecognizable from the one that dominated the early years of crypto, with some leaders who lack deep experience in the industry.

Despite its early start, Coinbase has never had a strong hold over the international market, which is dominated by Binance. The company went into India despite widespread uncertainty about how the government would react, an approach that industry experts considered unwise.

Then, in the spring, Coinbase unveiled its most-hyped product of the year, a marketplace for non-fungible tokens, the digital collectibles known as NFTs. But the marketplace failed to draw much interest and was criticized by NFT aficionados.

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Not all of Coinbase’s recent struggles are of its own making. The steep decline in crypto prices has led to a drop in trading, which accounts for the vast majority of the company’s revenue. As the largest crypto company on the public market, Coinbase bears the brunt of the broader industry’s problems, with its stock price fluctuating in parallel with Bitcoin and other volatile cryptocurrencies. (The company got a boost this week, when it announced a partnership with BlackRock, the world’s largest asset manager. Its stock was up almost 5% at the close of trading on Thursday.)

Armstrong declined to be interviewed. But five of his top executives defended the company’s performance. In a series of interviews, they said Coinbase was developing an array of crypto products, some of which may take time to catch on, and emphasized that the company had weathered past downturns.

Emilie Choi, chief operating officer, said Coinbase’s business model — in which trading fees keep the company running while other projects develop — resembled the approach of major tech companies such as Meta, which relies on ad dollars to fund longer-term bets.

“The way that we operate is the way we’re always going to operate,” Choi said. “A long-term focus on the future.”

Coinbase was founded in 2012 by Armstrong and Fred Ehrsam, a former Goldman Sachs trader who now runs a crypto investment firm. In an industry rife with fraud, Coinbase established a reputation as a safe, easy-to-use platform for buying and selling crypto. But as the business grew, Armstrong’s leadership sometimes drew internal dissent: In 2020, Black employees complained about discriminatory treatment.

In April 2021, Coinbase went public at an $86 billion valuation, making Armstrong one of crypto’s wealthiest executives. The company became a household name, known for its memorable Super Bowl ad featuring a bouncing QR code.

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But as Coinbase grew, some employees worried that it wasn’t doing enough to compete with FTX and Binance in the international market, especially with American regulators contemplating a crackdown on the industry.

In 2019 and 2020, Coinbase executives discussed opening an international hub in Singapore, according to three people familiar with the talks. The company recognized the need to compete with Binance by offering a wider array of tokens, as well as derivatives trading products prohibited in the United States, the people said. But the project never came to fruition.

More recent efforts at international expansion have foundered. In India, Coinbase said it would plug into a popular, government-backed payments system called Unified Payments Interface. But shortly after Coinbase’s announcement, the National Payments Corporation of India, a public-private group that runs UPI, tweeted that it was “not aware of any crypto exchanges using UPI.”

Soon, Coinbase cut off access in India; local customers can still use the exchange to trade one type of crypto for another, but they can’t buy digital assets with traditional currency. In an earnings call in May, Armstrong said the company had faced “informal pressure” from the Indian authorities.

“Our preference is really just to work with them and focus on relaunching,” he said.

The fanfare of Coinbase’s launch struck others in the crypto industry as foolish. In private discussions with the industry, Indian regulators had suggested that they were cautious about appearing to openly endorse crypto, according to someone involved in the talks, and would prefer for companies to take a more measured approach.

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Coinbase “overestimated the government’s potential support,” said Prasanto Roy, a technology policy consultant in India. “It went overboard.”

In an interview, Nana Murugesan, a Coinbase executive who oversees international expansion, said the company had gone into India despite the uncertainty because it wanted to clarify the country’s regulatory posture.

“Action produces information,” Murugesan said. “We want to learn from this information and drive our decision-making and next steps.”

Over the years, Coinbase has tried to expand in other ways, creating a suite of products and services. Still, in the first quarter of this year, nearly 90% of its revenue came from trading fees.

Coinbase started work on the NFT marketplace last year, with a team that eventually grew to about 30 engineers, designers and other employees. Armstrong hyped the project, saying that NFTs “could be as big or bigger” than Coinbase’s cryptocurrency business.

But the development of the marketplace was a painful process, slowed down by disagreements about what the product should look like and what kinds of customers it should target, according to three people familiar with the situation.

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The project was spearheaded by Sanchan Saxena, a recent recruit from Airbnb, who envisioned an Instagram-style site built to showcase users’ NFT collections. Some employees who worked on the marketplace were skeptical that the idea would catch on, two of the people said, since NFT traders have often treated the items as vehicles for speculative bets rather than as digital art.

Coinbase hoped to unveil the marketplace in the first quarter of this year, Saxena said in an interview. But it was delayed until late April. By that point, the broader NFT market had cratered: Sales were down more than 80% from the fall.

After its release, the marketplace got scathing reviews. In the last week of July, it generated about $24,000 a day in trades; its main competitor, OpenSea, which serves as a kind of eBay for NFTs, generated 600 times that amount.

Saxena said the Instagram-style approach was aimed at creating the type of crypto community that exists on sites such as Twitter and Discord.

“We are still pursuing this product. We’re not going to throw in the towel,” he said. “We could have done a better job of explaining probably that ‘Hey, our focus is web3 social first and foremost.’”

In the 18 months before the crypto market crash, Coinbase’s staff more than quadrupled in size, to 6,100 from 1,250. (A spokesperson said the company had “put a huge emphasis” on hiring employees with strong crypto backgrounds, especially in key product development roles.)

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But as Coinbase grew, projects started to feel overstaffed and the decision-making process slowed amid layers of bureaucracy, according to five people familiar with the company. Longtime employees were concerned that new hires felt “rudderless,” one person said, and joked that you could tell the length of someone’s tenure at Coinbase by the number of times the new recruits came to them asking for help.

Even the Super Bowl ad nearly didn’t come together: As the game approached, Coinbase hadn’t settled on an idea and employees discussed the possibility of selling back the airtime, according to two people familiar with the matter.

The bloat was especially severe on Coinbase’s customer-service team. New staff members often felt that they didn’t have enough to do. “I got maybe four phone calls a day for a while,” said David Visini, a customer-service employee who was laid off. “It was dead, dead, dead.”

Choi, the chief operating officer, acknowledged that Coinbase had “overhired” during the pandemic and said it was difficult to integrate new recruits in a remote environment.

“I don’t know that we had exactly the right set of tools to set them up for success,” she said.

The crypto market crashed in May, causing Coinbase’s stock price to fall about 60%. In the first quarter, Coinbase’s revenue dropped 27% from a year earlier, to $1.17 billion, even as its expenses more than doubled, to $1.72 billion.

Its competitors appear to be faring better. Sam Bankman-Fried, CEO of FTX, said in an email that his financial results had been “ballpark similar” to last year, when the company recorded profits of roughly $350 million. Binance, the largest exchange in the world, declined to reveal revenue figures. But in June, company founder and CEO Changpeng Zhao announced he was hiring for 2,000 open positions.

That month, Coinbase employees circulated a petition demanding the ouster of several top executives. Armstrong responded aggressively on Twitter, calling on disgruntled employees to quit. But at a staff meeting, he and other executives struck a more conciliatory note, saying that employees should keep faith in crypto, and that the company would emerge stronger from the tumult, according to two people who attended.

A few days later, the company laid off 1,100 employees.