Exchanging cryptocurrencies The newest company in the sector to announce layoffs is Luno, which plans to reduce 35% of its global personnel.
The CEO of the London-based company, Marcus Swanepoel, notified staff members of the layoffs at a live-streamed town hall on Wednesday (January 25, 2023) at 12 p.m. London time.
“2022 has been an incredibly tough year for the broader tech industry and in particular the crypto market,” Swanepoel said in an internal memo which shared with CNBC Wednesday.
“Luno unfortunately hasn’t been immune to this turbulence, which has affected our overall growth and revenue numbers.”
According to Luno’s LinkedIn site, the company employs 960 people overall, therefore this will affect more than 330 employment.
The cuts impact Luno’s marketing teams in particular. A Luno spokesperson told CNBC the layoff measure would have “minimal or no impact on key operating, and compliance teams.”
Luno, which has offices in Africa, southeast Asia and Europe, is part of the Digital Currency Group crypto conglomerate. The company will also be scaling back its U.S. and Australia operations, a company spokesperson told CNBC.
One of the many cryptocurrency companies affected by the aftermath from the failure of FTX, once one of the biggest crypto exchanges in the world, is DCG. DCG’s lending division, Genesis, declared bankruptcy last week.
After a dispute with one of its competitors, Gemini, over a disputed loan agreement that produced large returns for Gemini consumers through Gemini’s high-yield lending product, Gemini Earn, Genesis filed for bankruptcy.
Gemini clients have $900 million stored on Gemini Earn. After Genesis, which had lent the money to significant institutional borrowers, paused client redemptions, the service stopped accepting withdrawals.
The crypto industry has been mired in a downturn known as a “crypto winter” since the collapse in May last year of controversial algorithmic stablecoin terraUSD. Higher interest rates from the Federal Reserve have also spooked market players.
In the memo shared with employees Wednesday, Luno’s Swanepoel said the industry had seen a “series of shocks” that led to a constrained funding environment and a shift toward long-term profitability.
“While we anticipated a downturn and proactively planned ahead with a business and funding model that can be resilient to some of these factors, the sheer scale and speed of all of this happening, and all at the same time, has put significant strain on our original plan,” Swanepoel said.
“What this means in practice is that in addition to streamlining our strategy to focus on our core strengths, we need to also substantially decrease our cost base which includes employee headcount in all of our markets in order for us to be set up for success going forward.”
Roughly, $2 trillion of value has been erased from the overall crypto market since the peak of the crypto boom in November 2021 although bitcoin has had a bit of bounce since the start of the year.
TerraUST’s failure, coupled with deep declines in digital currency prices, sparked a cascade of further crypto failures, including Three Arrows Capital, Voyager Digital, FTX, BlockFi and Genesis.
