DCG-owned crypto exchange Luno suspends 35% of staff

A deteriorating macroeconomic environment and the collapse of industry giants such as FTX and Terra have weighed on bitcoin’s price this year.

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Cryptocurrency exchange Luno is the latest company in the industry to make layoffs, seeking to cut 35% of its global workforce.

The CEO of the London-based company, Marcus Swanepoel, briefed employees on the layoffs at 12pm London time on Wednesday at a live-streamed town hall.

“2022 has been an incredibly difficult year for the broader technology industry and the crypto market in particular,” the company said in a statement shared with CNBC on Wednesday.

“Unfortunately, Luno has not been immune to this turbulence, which has impacted our overall growth and sales figures.”

Luno has a total workforce of about 960, according to his LinkedIn profile, meaning more than 330 jobs will be affected.

The cuts particularly affect Luno’s marketing teams. A Luno spokesperson told CNBC that the layoff measure would have “minimal, if any, impact on key operations and compliance teams.”

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Luno, with offices in Africa, Southeast Asia and Europe, is part of the crypto conglomerate Digital Currency Group.

DCG is one of many crypto companies caught up in the fallout from the collapse of FTX, formerly one of the world’s largest crypto exchanges. Genesis, DCG’s lending unit, filed for bankruptcy last week.

Genesis’ bankruptcy filing came after a standoff with one of its colleagues, Gemini, over a disputed loan deal that provided rich returns for Gemini clients through Gemini’s high-yield loan product, Gemini Earn.

Gemini customers have saved $900 million on Gemini Earn. The service halted withdrawals after Genesis, which lent the money to large institutional borrowers, stopped customer payments.

The crypto industry has been mired in a recession known as a “crypto winter” since the collapse last May of the controversial algorithmic stablecoin terraUSD. Higher interest rates from the Federal Reserve have also spooked market players.

Since the height of the crypto boom in November 2021, about $2 trillion in value has been erased from the overall crypto market – although bitcoin has been rebounding a bit since the start of the year.

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The failure of TerraUST, coupled with deep drops in digital currency prices, led to a cascade of further crypto failures, including Three Arrows Capital, Voyager Digital, FTX, BlockFi, and Genesis.

In a statement shared with employees on Wednesday, Luno’s Swanepoel said the industry had seen a “series of shocks” leading to a constrained funding environment and a shift toward long-term profitability.

“While we anticipated a recession and proactively planned ahead with a business and financing model that can be resilient to some of these factors, the sheer scale and speed of it all, all at the same time, has put significant strain on our original plan Swanepoel said.

“What this means in practice is that we must not only streamline our strategy to focus on our strengths, but also significantly reduce our cost base – including headcount in all our markets – to be poised for success further. “

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