Luno cuts 35% of its workforce after its US owner loses $1bn
According to US media sources, the US owner of the South African-founded cryptocurrency exchange Luno recorded a loss of $1.1 billion (R20 billion) last year. The Digital Currency Group (DCG) was affected by plummeting cryptocurrency values and the bankruptcy filing of its Genesis lending arm, according to the cryptocurrency news website CoinDesk.
CoinDesk, like Luno, is a subsidiary of DCG, which also controls over 200 crypto-related companies, including Genesis, one of the world's top cryptocurrency lenders. Genesis declared bankruptcy in New York earlier this year.
At the end of last year, the company experienced a liquidity crisis and immediately ceased all withdrawals and new loans. This followed a crypto market crisis in 2022, with some of the largest cryptocurrencies losing 50% to 60% of their value. Furthermore, Genesis was impacted by FTX's unexpected collapse.
Genesis held R3 billion with the collapsed cryptocurrency exchange, which it can no longer access. Genesis was also sued by US financial officials last month for allegedly selling unregistered investments. Luno has announced that it will lay off 35% of its workforce, including South African employees. When the retrenchments are completed, the exchange will have approximately 700 employees.
While Luno's headquarters are in London, the company was formed in South Africa in 2013 and is still the country's largest cryptocurrency platform. It has surged to 10 million customers in 40 countries during the last ten years.
'Important strain'
According to Luno SA country manager Christo de Wit, job losses were necessary due to last year's slump in the tech sector, the drop in the price of cryptocurrencies, and the bankruptcy of FTX Trading.
"While we anticipated a downturn and planned ahead with a business and funding strategy…. the sheer scale and speed of all of this happening at the same time put significant strain on our original plan," he said last month.
"Reducing employee headcount in all of our markets was needed to position ourselves for future success."
De Wit stated that the difficulties at DCG had not affected Luno clients' ability to withdraw payments.
"Luno holds customers' funds safely and securely independently of DCG, and those funds are always available to customers," he stated last month.
