Balance Sheet

Payments provider Affirm to sunset crypto program after 19% staff cut

Users will not be able to buy Bitcoin after March 2, and the “Affirm Crypto Program” will officially shut down on March 31.

Max Levchin, the CEO of buy-now-pay-later company Affirm, has confirmed that they will be shutting down their “Affirm Crypto Program” amid dampening consumer spending and a changing macroeconomic environment.

The CEO released a letter to shareholders on Feb. 8 alongside a 19% staff 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 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.”

The firm’s chief financial officer, Michael Linford, said the decision was made to meet profitability targ.

“We have taken decisive actions to reduce expenses. 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,” he said.

Affirm is a millennial-facing payments service provider similar to Afterpay that allows customers to purchase a product online and pay later.

The firm launched the “Affirm Crypto Program” in late 2021, near crypto’s market peak, partnering with Bitcoin payments platform NYDIG to process Bitcoin (BTC) transactions and provide a crypto account for Affirm users.

The program enabled users to set up a scheme where monthly interest accrued from a user’s savings account would be automatically converted into BTC.

However, Affirm noted its cryptocurrency program will officially close on March 31, according to the Affirm website:

“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.

As of March 2, Affirm users will no longer be able to buy Bitcoin. Source: Affirm

The shutdown is of course a part of a larger staff cleanout for the San Francisco-based lending platform. Levchin said the 19% reduction in its workforce took effect Feb 8.

Levchin shouldered the blame, stating in a Feb. 8 note to employees that he reacted too slowly to actions from the U.S. Federal Reserve:

“Everything changed in mid-2022. 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.”

Approximately 2,593 individuals claim to be employed at Affirm, according to from LinkedIn.

This means about 500 people were likely impacted by the announcement.

Related: Coinbase to cut another 20% of its workforce in second wave of layoffs

Cointelegraph reached out to Affirm to find out how many employees related to its crypto initiative were impacted, however, no additional information was shared.

The CEO did however state in the letter that he expects to keep the current headcount to remain essentially flat for the foreseeable future.

The price of Affirm’s stock, tickered AFRM, has fallen 19.1% in after-hours trading in the NASDAQ, according to Google Finance.

Which tokens could FTX dump on the market?

The list of illiquid tokens includes a Donald Trump prediction token, an animal fundraising coin and tokens for several Solana projects.

The new management of the bankrupt FTX exchange has identified $5.5 billion in assets that can be used to repay creditors, sparking fears a large swathe of crypto assets could be dumped on markets.

On Jan. 17, FTX debtors identified $3.5 billion in crypto assets with $1.6 billion associated with the bankrupt exchange. The best known holdings are Solana’s SOL and FTX exchange token FTT, along with liquid assets including XRP, DOGE, Aptos (APT), Polygon (MATIC), TON, and BitDAO (BIT).

Liquidators valued the tokens at the time of the bankruptcy petition. Cinneamhain Ventures partner, Adam Cochran, commented:

“So liquidators were counting token prices on the day of filing, and consider the $529M of FTT to be ‘liquid’ in this calculation, as well as $685M of Solana which would mega nuke the SOL market.”

He added these were the only “liquid” tokens they counted, adding “everything else is going to tank the price if you sell it.”

A list of illiquid crypto tokens has also been identified raising concerns they could be sold off causing a price crash.

On Jan. 18, Fortune reporter Leo Schwartz also posted the FTX report, highlighting the  “illiquid tokens” list includes almost 10 billion Serum (SRM), LUNA, and Solana-wrapped versions of BTC and ETH.

But many were obscure project tokens such as TRUMPLOSE, BEAR, and MEDIA.

He highlighted TRUMPLOSE as an “Easter egg” which ties in with FTX and Alameda supporting Democrat politicians with large donations. TRUMPLOSE is a prediction token that FTX used during the U.S. presidential election. Traders could purchase TRUMPWIN or TRUMPLOSE tokens that would resolve to $1 should Trump have won or lost. FTX holds almost 14 million of them.

BEAR Coin is a cryptocurrency designed to help animals by decentralized fundraising in cooperation with NGOs and animal lovers. There are 190 billion of them on the FTX balance sheet.

It also has 8.3 million tokens from the bandwidth-sharing network, Media. The list goes on with 9.8 billion MAPS tokens from the Maps.me travel app, and almost 10 billion OXY tokens for the Solana-based DeFi broker Oxygen.

Related: FTX has recovered over $5B in cash and liquid crypto: Report

Other illiquid assets include 2.4 billion Alium Finance (ALM), and more than 277 million in Bonafida (FIDA), a Solana developer platform. The list also included BRZ, GT, LIKE, HRXO, MSOL, JSOL, XSUSHI, AELPH, and JET holdings.

SBF still blogging

On Jan. 18, FTX founder Sam Bankman-Fried reappeared with a new blog post claiming the FTX report’s information on the state of the business was “extremely misleading.”

“FTX US was solvent when it was turned over to S&C [Sullivan & Cromwell], and almost certainly remains solvent today,” he stated.

Circle’s USDC issuance falls 3 billion from Binance stablecoin conversions

Circle attributed its miscalculated financial projections to Binance implementing USDC to BUSD auto-conversions and the recent collapse of FTX.

Circle, the company behind the issuance of USDC Coin (USDC), said recent events have caused it to miscalculate its financial projections — referring to the collapse of FTX and a decision by rival exchange Binance.

In September, crypto exchange Binance announced it will auto-convert USDC to its own stablecoin Binance USD (BUSD), last week saw the collapse of FTX.

Circle’s 2022 miscalculated projection was noted in its amended S-4 registration statement, which was filed to the United States Securities Exchange Commission (SEC) on Nov. 14.

The S-4 is a registration statement is a document that companies fill out and submit to the SEC before merging, taking over another company or providing an exchange offer.

Circle noted that while they were not able to assess how significant a role Binance’s auto conversion’s from USDC to BUSD played in USDC’s decline in circulation, they observed an approximate $3 billion increase in BUSD from Aug. 17 to Sept. 30, with the firm adding:

“We estimate that up to $3.0 billion of the $8.3 billion decline in USDC in Circulation from June 30, 2022 to September 30, 2022 was driven by the auto conversion by Binance.”

The stablecoin issuer added that the additional $13.5 billion USDC issued since June 30 was a 36% reduction in comparison to 2021.

The first S-4 filing was submitted to the SEC in Aug. 2021, in which Circle planned to merge with capital markets firm Concord Acquisition. However, Concord decided to delay the merger in Oct. 2022 until “no later than Jan. 31, 2023.”

As for its business partnership with FTX, Circle has historically conducted payment processing services for FTX by issuing the now bankrupt trading platform with USDC and being a customer of Circle’s Payment API over the last 18 months, according to Circle CEO and co-founder Jeremy Allaire.

The stablecoin issuer said the financial impact that FTX has had on its balance sheet wouldn’t be any larger than its $10.6 million equity investment, which it will officially address in the next reporting period.

“The Company has suspended its services and transactions with the FTX Group and is in process of evaluating the impact on the provision of future services to the FTX Group and the potential indirect financial impact of the FTX Group bankruptcy,” the filing stated.

Related: Crypto stablecoin issuer Circle adds Apple Pay support

The $10.6 million figure comes as Allaire confirmed in an 11-part Twitter thread on Nov. 9 that Circle only holds a “tiny” equity position in FTX, which represented “no material exposure” on the company’s balance sheet:

Allaire also added that “Circle has never made loans to FTX or Alameda, and has never received FTT as collateral, and has never held a position in or traded FTT.”