Facebook’s ambitious efforts to bring cryptocurrencies to the masses have failed.
Diem Association, a consortium founded by Facebook in 2019 to build a futuristic payment network, is shrinking its technology and serving Bitcoin and blockchain companies for about $200 million in California. Those familiar with the matter said they sell to small banks.
Bank, Silvergate Capital Ltd
Previously signed a contract with Diem and issued some stablecoins backed by hard dollars and designed to be less volatile than Bitcoin and other digital currencies. These were the focus of our efforts.
This sale represents an effort to squeeze the remaining value from a venture that was challenged from almost the beginning. Facebook, now a meta platform Ltd,
Launched the project as Libra in 2019 and touted the project as an easy way to spend money as billions of users on social networks send text messages.
Bloomberg previously reported that Diem is considering selling its assets.
Libra brings renowned partners in e-commerce and payments, including PayPal Holdings Ltd,
Stripe Inc. — Partly to show support from the financial industry and partly to keep the project away from Facebook itself, which was under pressure to crack down on the platform. Partners have agreed to join the Libra Association, a Swiss-based group that governs Stablecoin, and donate millions of dollars each to develop the project.
But it almost soon ran into resistance in Washington. Authorities expressed concern about the impact on financial stability and data privacy, and were concerned that money launderers and terrorist funders could abuse Libra. Federal Reserve Chair Jerome Powell said the central bank has serious concerns. Early supporters dropped out, and Mark Zuckerberg was called before Congress, where he defended Facebook’s plan to bring financial services to the global bank shortage.
In 2020, the group hired Stuart Levy, a former US Treasury official and Chief Executive Officer of HSBC Holdings PLC, as Chief Executive Officer, abandoning the Libra name and supporting Diem.
The stablecoin deal with Silvergate was part of last year’s renewal aimed at soothing regulatory agencies.
Meta-executive David Marcus, who oversaw the launch of Libra, left the company last year.
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