Luno was the first digital assets exchange to be approved by the Securities Commission in Malaysia, opening the door for Malaysians to trade and store cryptocurrency assets in a more regulated setting.
But as challenging macroeconomic factors adversely impact sectoral growth across the board, the tech industry overall and the cryptocurrency industry have been hit by waves of layoffs as companies struggle to find ways to rebalance their business plans towards more conservative outlooks for 2023.
Luno became the latest to announce workforce reductions yesterday, saying it would cut 35% of its team globally. In an internal message to employees, Luno co-founder and CEO Marcus Swanepoel cited the turbulence impacting the broader market and how the asset exchange needed to readjust its focus to “lay a strong yet sustainable foundation for the business as we prepare to come out of this current cycle in a very strong position. ”
2022 saw over a trillion dollars in value wiped out as the cryptocurrency sector plunged into one of its coldest bear markets since 2014. The total crypto market capitalisation was 64.1% lower that it had been at the beginning of the year, and rising interest rates and a sagging economic outlook saw the demise of notable crypto exchanges and hedge funds FTX, Three Arrows Capital, Genesis, and Celsius Network.
“This in turn has impacted us indirectly in a number of ways: on the capital side, a significantly more constrained funding environment, with the market’s focus shifting from long term investment to shorter term profitability, and on the operating side, a negative impact on market sentiment and consequently on growth and revenue for our business, along with all of our peers and competitors,” Luno co-founder Marcus explained in his note.
“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.”
Luno was one of only four registered digital asset exchanges operating under cryptocurrency regulations in Malaysia, the others being MX Global, SINEGY Technologies, and Tokenize Technology. The exchange was acquired by New York-based Digital Currency Group in September 2020, which also owned cryptocurrency lender Genesis that filed for bankruptcy protection last week.
Luno was in the process of rolling out numerous features to its platform in Malaysia, including language availability in Malay, localised educational content, and adding high-profile tokens Cardano and Solana. At its height, Luno claimed over 180,000 users in Malaysia along with over 90% of the local regulated digital asset exchange market share.
A 35% headcount reduction would affect over 330 employees out of its total team of about 960, as per CNBC. How many of those positions would be affected in the Malaysian office is presently unknown, as Luno Malaysia declined to comment at this point.
Luno joins US-based exchange Coinbase, Singapore-based Crypto.com, Amber Group, and Huobi as just some of the companies in the crypto space to reveal mass redundancies in recent months.
Featured image credit: Edited from Unsplash and freepik
