Payments Company Affirm to Shut Down Crypto Venture
- Buy now and pay later company, Affirm, will be shutting down its crypto ventures due to dampened consumer spending.
- CEO Max Levchin revealed that the company will be putting a stop to their “Affirm Crypto Program” and also lay off around 19% of its employees.
- Levchin the company needs to offset some liabilities on its balance sheet and is therefore forced to cut costs.
- The company will be discontinuing the cryptocurrency program on March 31, 2023.
The prevailing bearish condition of the crypto market is driving several companies out of the space after they tried to embrace digital assets and allowed their customers to trade these blockchain-based assets. Notably, a publicly traded payments company that allows people to buy now and pay later, Affirm, will be shutting down its crypto ventures due to dampened consumer spending and a changing macroeconomic environment.
In a letter shared by the CEO of the San Francisco-based company, Max Levchin, to its shareholders, it was revealed that the company will be putting a stop to their “Affirm Crypto Program” and also lay off around 19% of its employees. The executive stated in the Feb. 8 letter that the company needs to offset some liabilities on its balance sheet and is therefore forced to cut costs.
“In a period of increased economic uncertainty, we are doubling down on our core businesses, delaying projects with less certain revenue timelines, and aligning our operating expenses with revenue. Concurrent with reducing our workforce, we are sunsetting several initiatives, such as Affirm Crypto.”
Affirm’s chief financial officer, Michael Linford, stated that the company is more focused on its profitability goals, which is a major reason why almost 19% of the employees will be laid off. The company has taken “decisive actions to reduce expenses,” said Linford, while adding, “We believe our cost base is now appropriately sized to meet our profitability goals while still supporting our product roadmap and long-term growth ambitions.”
Affirm is a company that provides services similar to Afterpay and is focused on millennial consumers, allowing them to purchase a product online and pay later. The “Affirm Crypto Program” made its debut in late 2021, when the popularity of the crypto market was at its peak and there were several people calling for the world’s biggest cryptocurrency, Bitcoin (BTC), to reach $500,000. However, such predictions failed to hold, as 2022 witnessed some of the biggest crypto market crashes and bankruptcies in the last decade.
The “Affirm Crypto Program” allowed users to be a part of a scheme where monthly interest accrued from a user’s savings account would be automatically converted into Bitcoin. However, as per the company’s website, this program will be shut down on March 31st. The website reads that “on March 2, 2023, the ability to purchase bitcoin through the Affirm app will end. We will be discontinuing the Affirm Cryptocurrency Program on March 31, 2023.”.
“Any bitcoin in your account when the program ends will be sold at CME CF Bitcoin Reference Rate (BRR) as of 4:00 p.m. London Time, and the sale proceeds will be deposited into your Affirm Savings account,” the note added.
Interestingly, Levchin also shared a note with the company’s employees on Feb. 8, taking the blame for firing 19% of the payment company’s workforce while adding that “everything changed in mid-2022.” The executive added that “over the last three quarters, the Fed increased its benchmark rate at an unprecedented pace. This has already dampened consumer spending and increased Affirm’s cost of borrowing dramatically.”
“The root cause of where we are today is that I acted too slowly as these macroeconomic changes unfolded,” the CEO accepted.
On the other hand, the largest exchange in the US, Coinbase, has also shut down creator Drops on its NFT platform due to decreasing demand but has stated that the platform is not shutting down, citing such rumors as untrue.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
