Genesis bankruptcy: Luno Malaysia assures funds are safe

Photo credit: Luno

The Malaysian arm of crypto exchange Luno is denying that customer funds are intermingled with its parent, crypto investment firm Digital Currency Group (DCG), or its subsidiaries. This includes Genesis, a lending firm that filed for bankruptcy recently.

Kuala Lumpur-based industry insiders raised this concern with Tech in Asia despite Genesis not being approved by the local regulator, Securities Commission Malaysia (SC).

Luno is Genesis’ sister company and lending partner. In the case of the latter, Luno users were able to sign up for a savings wallet that let them earn interest on crypto. In turn, the crypto assets in those savings wallets would be used by Genesis for its loans. But the savings wallet was not offered to any Malaysian customers.

In November last year, Luno took steps to ensure its customers had access to their savings wallets after Genesis decided to temporarily suspend redemptions and loan originations.

One source told us that there were concerns that funds from Luno Malaysia were mixed together with those from other countries – which had access to Genesis – in a single wallet.

However, Luno Malaysia country manager Aaron Tang told Tech in Asia that all customer funds on the platform are not interlinked with DCG or any of its subsidiaries.

“Most importantly, irrespective of how Luno as a business is funded, customer funds are always segregated from corporate funds,” he said.

Tang assured customer funds are maintained with its “appointed trustee partner” per SC requirements.

DCG, a crypto conglomerate, is among several firms entangled in the fallout from the collapse of FTX, formerly one of the world’s largest crypto exchanges. This led to DCG’s lending unit, Genesis, filing for bankruptcy.

See also: Tracking the ripple effects of FTX’s collapse

Aside from the Genesis debacle, Luno also laid off 35% of its global workforce last week.

Tang told Tech in Asia that internal redundancies had no impact on customers and operations. “I believe it’s also important to reiterate to everyone that customer funds are safe and operations continue as normal,” he added.

Updated (February 10, 12:53 p.m. SGT): This article was updated to include additional information on Luno’s savings wallet.