Luno, the global crypto currency trading platform founded by four South Africans, is retrenching 35% of its staff across all the regions in which it operates.
The crypto platform informed staff in January of the looming redundancies, which come amid general volatility in financial markets and a crypto winter sparked by a series of negative events in the digital token sector. The crypto sector saw a slew of scandals in 2022 ranging from the collapse of the Luna crypto network in May to the bankruptcy and downfall of crypto exchange FTX in November, which sent the price of digital assets into a downward spiral.
“Depending on the outcome of the formal retrenchment process Luno will have a staff complement of around 700 globally [after the retrenchments],” Christo de Wit, Luno SA country manager, told Business Day. “We are not able to confirm the final number at this stage or the impact per country. We have been working on this singular round of layoffs since January 25 and the process will be concluded shortly.”
Luno was founded by South Africans Marcus Swanepoel, Timothy Stranex, Carel van Wyk and Francois Paul, was incorporated in Singapore in 2012 before being officially launched the following year. It now has offices in London, Cape Town, Johannesburg, Singapore, Sydney, Lagos, Jakarta, Kuala Lumpur and Stamford in the US, catering to more than 9-million users worldwide.
However, parent company Digital Currency Group (DCG), which acquired Luno in 2020 from investors that included Naspers and Rand Merchant Investment (RMI), has found itself at the centre of a negative crypto storm recently.
DCG, the world’s largest blockchain investor, suffered a $1.1bn loss last year after crypto prices plunged and the lending arm of one of its investee companies, Genesis Global Capital, froze customer accounts in November, and then filed for bankruptcy protection in January.
De Wit said 2022 has been an “incredibly tough year” across the broader tech industry while the crypto industry had also suffered a series of negative shocks. That resulted in what he called “a significantly more constrained funding environment”, meaning long-term investors were more reluctant to disburse capital.
On the operational side, the crypto sector had also been hurt by negative market sentiment that had curbed growth and revenue.
“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, put significant strain on our original plan,” said De Wit. “Decreasing employee headcount in all of our markets was needed to be set up for success going forward.”
De Wit said the retrenchments won’t impact Luno’s customers or operations as depositor funds are held independently of DCG and are accessible at any time.
“Irrespective of how Luno as a business is funded, customer funds are always segregated from corporate funds,” he said. “Luno’s published proof of reserves verification confirms that we hold all customer cryptocurrency on a 1:1 basis.”
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