Payment provider Confirm to sunset crypto program after 19% cut in staff
Max Levchin, CEO of buy-now-pay-later company Affirm, has confirmed that they will shut down their “Affirm Crypto Program” amid subdued consumer spending and a changing macroeconomic environment.
The CEO issued a letter to shareholders on February 8 along with a 19% cut. He cited uncertain macroeconomic conditions and the need to offset some liabilities on the firm’s balance sheet as the two main reasons behind the decision:
“In a period of increased economic uncertainty, we are doubling down on our core business, delaying projects with less certain revenue timelines and aligning our operating costs with revenue. Along with reducing our workforce, we are ending several initiatives, such as Affirm Crypto.”
The firm’s chief financial officer, Michael Linford, said the decision was taken to meet the profitability target.
“We have taken decisive action to reduce expenses. We believe our cost base is now appropriately sized to meet our profitability targets while supporting our product roadmap and long-term growth ambitions,” he said.
Affirm is a millennial-facing payment service provider similar to Afterpay that allows customers to buy a product online and pay later.
The firm launched the “Affirm Crypto Program” in late 2021, near the crypto’s market peak, and is partnering with Bitcoin payment platform NYDIG to process Bitcoin (BTC) transactions and provide a crypto account for Affirm users.
The program allowed users to set up a scheme where monthly interest accrued from a user’s savings account was automatically converted to BTC.
However, Affirm noted that its cryptocurrency program will officially close on March 31, according to the Affirm website:
“2. March 2023, the ability to buy bitcoin through the Affirm app will end. We are discontinuing the Affirm Cryptocurrency program on March 31, 2023.
“All bitcoins in your account when the program ends will be sold at the CME CF Bitcoin Reference Rate (BRR) from 16:00 London Time and the sale proceeds will be deposited into your Affirm Savings account,” the note added.
The closure is of course part of a larger staff cleanup for the San Francisco-based lending platform. Levchin said the 19% reduction in the workforce took effect on February 8.
Levchin took the blame, stating in a February 8 memo to staff that he reacted too slowly to actions by the US Federal Reserve:
“Everything changed in mid-2022. Over the last three quarters, the Fed raised its benchmark interest rate at an unprecedented pace. This has already dampened consumer spending and dramatically increased Affirm’s borrowing costs. The root cause of where we are today is that I acted too slowly while these macroeconomic changes unfolded.”
About 2,593 people claim to be employed by Affirm, according to LinkedIn.
This means that around 500 people were likely affected by the announcement.
Related: Coinbase to cut another 20% of workforce in second wave of layoffs
Cointelegraph reached out to Affirm to find out how many employees related to the crypto initiative were affected, but no additional information was shared.
However, the CEO stated in the letter that he expects to keep the current number of employees essentially flat for the foreseeable future.
The price of Affirm’s stock, ticked AFRM, has fallen 19.1% in aftermarket trading on NASDAQ, according to Google Finance.
