Facebook’s ambitious efforts to bring cryptocurrency to the masses have failed.
The Diem Association, the Facebook consortium founded in 2019 to build a futuristic payment network, is winding down and selling its technology to a small California bank serving bitcoin and blockchain companies for about $ 200 million, said a person familiar with the matter.
Banks, Silvergate Capital Corp.
had previously entered into an agreement with Diem to issue some of the stack coins – which are backed by hard dollars and designed to be less volatile than bitcoin and other digital currencies – which were at the heart of the effort.
The sale represents an attempt to squeeze some residual values from a company that was challenged almost from the start. Facebook, now Meta Platforms Inc.,
launched the project in 2019 as Libra, and pitched it as a way for the social network’s billions of users to spend money as easily as sending an SMS.
Bloomberg previously reported that Diem was considering selling its assets.
Libra has hired well-known partners in e-commerce and payments, including PayPal Holdings Inc.,
and Stripe Inc. – partly to signal buy-in from the financial industry and partly to distance the project from Facebook itself, which was under pressure to politicize its platform. Partners agreed to join the Libra Association, a Swiss-based group that would manage stablecoin, and ponies millions of dollars each to develop the project.
But it encountered almost instant resistance in Washington. Officials expressed concern about its impact on financial stability and data protection and worried that Libra could be misused by money launderers and terrorists. Federal Reserve Chairman Jerome Powell said the central bank had serious concerns. Early backers dropped out, and Mark Zuckerberg was called to Congress, defending Facebook’s plan to bring financial services to the world’s subbanks.
In 2020, the group recruited Stuart Levey, a former US Treasury Secretary and top lawyer at HSBC Holdings PLC, as CEO and dropped the Libra name in favor of Diem.
The Stablecoin deal with Silvergate was part of a renewal last year aimed at appeasing regulators.
David Marcus, the Meta director who oversaw the launch of what was to become Diem, left the company last year.
Write to Peter Rudegeair at Peter.Rudegeair@wsj.com and Liz Hoffman at firstname.lastname@example.org
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Appeared in print on January 27, 2022 as ‘Facebook Gives Up Crypto Effort’.