Max Levchin, the CEO of the buy-now-pay-later company, has confirmed that he will shut down the “Affirm Crypto Program” amid consumer spending and a changing macroeconomic environment.
The CEO released a letter to shareholders on February 8 along with a 19% staff cut. He cited the uncertain macroeconomic situation and the need to balance some liabilities on the company’s balance sheet as the two main reasons for the decision:
“At a time of increased economic uncertainty, we are doubling down on our core business, delaying projects with less certain revenue timelines, and aligning operating costs with revenue. Along with reducing our workforce, we are ceasing several initiatives, such as Affirm Crypto.
The company’s chief financial officer Michael Linford said the decision was made to meet profit targets.
“We have taken significant steps to reduce costs. We believe our current cost base is the right size to achieve our profitability goals while still 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 products online and pay later.
The company launched the “Affirm Crypto Program” in late 2021 near the peak of the crypto market when it partnered with Bitcoin payment platform NYDIG to process Bitcoin (BTC) transactions and provide crypto accounts for Affirm users.
The program allows users to set up a scheme where the monthly interest received from the user’s savings account will be automatically converted into BTC.
However, Affirm notes the cryptocurrency program will officially close on March 31, according to Affirm’s website:
“On March 2, 2023, the ability to buy bitcoins through the Affirm app will end. We will end the Affirm Cryptocurrency Program on March 31, 2023.
“Any bitcoins in your account at the end of the program will be sold at the CME CF Bitcoin Reference Rate (BRR) at 4:00 pm London Time, and the proceeds of the sale will be deposited into your Affirm Savings account,” the note added.
The closing is likely part of a larger staff purge for the San Francisco-based lending platform. Levchin said a 19% workforce reduction is underway now.
In a February 8 note to employees, Levchin took the blame by stating that he was acting too slowly to act from the US Federal Reserve:
“Everything changes in mid-2022. Over the last three quarters, The Fed has increased benchmark rates at an unprecedented pace. This has reduced consumer spending and dramatically increased Affirm’s borrowing costs. The main reason for now is that I am acting very slowly due to macroeconomic changes this is open.
About 2,593 individuals claim to work at Affirm, according to current figures from LinkedIn.
This means that around 500 people are affected by today’s announcement.
related: Coinbase to cut another 20% of its workforce in a second wave of layoffs
Cointelegraph reached out to Affirmation to find out how many employees associated with the crypto initiative were affected, but no additional information was shared.
But the CEO stated in the letter that he expects the current headcount to remain flat for the foreseeable future.
Affirm’s share price, ticker AFRM, has fallen 19.1% in after-hours trading on NASDAQ, according to Google Finance.