Facebook’s ambitious effort to bring cryptocurrency to the masses has failed.
The Diem Association, the consortium Facebook founded in 2019 to build a futuristic payments network, is winding down and selling its technology to a small California bank that serves bitcoin and blockchain companies for about $200 million, a person familiar with the matter said.
The bank, Silvergate Capital Corp., had earlier reached a deal with Diem to issue some of the stablecoins—which are backed by hard dollars and designed to be less volatile than bitcoin and other digital currencies—that were at the heart of the effort.
The sale represents an effort to squeeze some remaining value from a venture that was challenged almost from the start. Facebook, now Meta Platforms Inc., launched the project in 2019 as Libra, pitching it as a way for the social network’s billions of users to spend money as easily as sending a text message.
Bloomberg earlier reported that Diem was considering selling its assets.
Libra brought on well-known partners in e-commerce and payments including PayPal Holdings Inc., Visa Inc. and Stripe Inc.—in part to signal buy-in from the finance industry and in part to distance the project from Facebook itself, which was under pressure about policing its platform. Partners agreed to join the Libra Association, a Switzerland-based group that would govern the stablecoin, and pony up millions of dollars each to develop the project.
But it almost immediately ran into resistance in Washington. Officials voiced concerns about its effect on financial stability and data privacy and worried Libra could be misused by money launderers and terrorist financiers. Federal Reserve Chairman Jerome Powell said the central bank had serious concerns. Early backers dropped out, and Mark Zuckerberg was called before Congress, where he defended Facebook’s plan to bring financial services to the world’s underbanked.
In 2020, the group recruited Stuart Levey, a former U.S. Treasury official and top lawyer at HSBC Holdings PLC, as chief executive and ditched the Libra name in favour of Diem.
The stablecoin deal with Silvergate was part of a revamp last year meant to appease regulators.
David Marcus, the Meta executive who oversaw the launch of what would become Diem, left the company last year.
SOURCE: Fox Business
IMAGE SOURCE: Pixabay
