Luno Financial savings Pockets spouse halts withdrawals

Luno’s lending partner for its Savings Wallet product, Genesis Global Capital, has temporarily suspended redemptions and new loan originations.

All cryptocurrency withdrawals on Luno remained available at the time of publication.

“This decision was made in response to the extreme market dislocation and loss of industry confidence caused by the FTX implosion,” said Amanda Cowie, vice president of communications and marketing at Digital Currency Group (DCG).

DCG is the parent company of Luno and Genesis. Luno is a South African crypto asset service provider that offers custodial (wallet), exchange, and yield-generating services.

“Importantly, this temporary action has no impact on the business operations of DCG and our other wholly owned subsidiaries,” Cowie said.

Luno launched its Bitcoin savings wallet in October 2020, adding Ethereum and USDC savings products in March 2021.

These wallets operate separately from Luno’s standard custodial service, allowing customers to earn interest on their cryptocurrency balances.

However, to generate this yield, Luno warns that it lends out customers’ cryptocurrency, which comes with inherent risks.

Until recently, Luno’s savings wallet terms stated that customers using the product effectively become clients of Genesis Global Capital.

On 1 November 2022, it updated the terms so customers would loan their coins to Luno, and it could then choose to lend those funds to Genesis.

“By utilising the Luno Savings Wallet, you expressly agree that any cryptocurrency deposited into your Savings Wallet will be lent to Luno, and from Luno may be lent on to Genesis,” the updated terms stated.

“Luno may generate a return for itself, by lending such cryptocurrency to its Lending Partners, and such return is independent of any rate of return that Luno may pay to you, in its capacity as principal.”

The terms also still indemnify Luno from any losses due to counterparties defaulting on the loan.

“There is a risk that we will be unable to return to you, an equivalent amount of cryptocurrency to that which you loaned to us at the point in time where you seek to withdraw that cryptocurrency, or at all,” it states.

Luno assures all funds are safe, available

Responding to the news, Luno founder and CEO Marcus Swanepoel assured that all funds on the platform were safe and accessible.

“Luno has previously taken steps to ensure that customers can retain access to Savings Wallet funds in the event redemptions from Genesis are not possible,” stated Swanepoel.

He said all customers, including those using the Savings Wallet, retain full access to their cryptocurrency.

“We are a full global reserve platform, meaning we don’t touch your funds without your permission, and we have been publicly and independently verifying this for over a year,” Swanepoel said.

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