A worsening macroeconomic climate and the collapse of industry giants like FTX and Terra have weighed on bitcoin’s price this year.
STR | Nurphoto via Getty Images
Cryptocurrency exchange Luno is the latest company in the industry to make layoffs, setting out to cut 35% of its global workforce.
The London-based firm’s CEO, Marcus Swanepoel, informed employees of the redundancies at 12 p.m. London time on Wednesday in a live-streamed town hall.
“2022 has been an incredibly tough year for the broader tech industry and in particular the crypto market,” the company said in a statement shared with CNBC Wednesday.
“Luno unfortunately hasn’t been immune to this turbulence, which has affected our overall growth and revenue numbers.”
Luno has a total headcount of roughly 960, according to its LinkedIn profile, meaning that more than 330 jobs will be impacted.
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.
DCG is one of several crypto firms caught up in the fallout from the collapse of FTX, formerly one of the world’s largest crypto exchanges. Genesis, the lending unit of DCG, filed for bankruptcy last week.
Genesis’ bankruptcy filing came after a standoff with one of its peers, Gemini, over a disputed lending agreement that generated rich returns for Gemini clients through Gemini’s high-yield lending product, Gemini Earn.
Gemini clients have $900 million stored on Gemini Earn. The service halted withdrawals after Genesis, which lent the funds out to large institutional borrowers, hit pause on client redemptions.
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.
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.
In a statement 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.”