Mark Zuckerberg's Cryptocurrency Project Unravels, Reportedly On Sale
Categories: Crypto News
The Diem Association, a cryptocurrency initiative once known as Libra backed by Meta Platforms Inc., is weighing a sale of its assets as a way to return capital to its investor members, according to people familiar with the matter. Diem is in discussions with investment bankers about how best to sell its intellectual property and find a new home for the engineers who developed the technology, cashing out whatever value remains in its once-ambitious Diem coin venture, said the people, asking not to be identified because the discussions aren't public. In 2019, when Meta's Facebook first unveiled the idea of its stable digital currencies -- stablecoins -- aimed at revolutionizing global financial services, they did so in collaboration with dozens of other companies. But the consortium wasn't enough to protect the project from worldwide regulatory scrutiny. After Zuckerberg was called to testify, some partners abandoned the project and it changed its name to Diem. Diem's ambitions scaled back and its founder, David Marcus, left Meta last year. The association struck an arrangement with Silvergate Capital Corp. to issue Diem, but resistance from the U.S. Federal Reserve dealt the effort a final blow, the people said. Without a green light from the bank's regulator, Silvergate was left unable to issue the new asset with confidence the Fed wouldn't crack down, and so the Diem effort had no coin.A Fed spokesman declined to comment on the agency's talks with the Diem advocates. The Diem Association declined to comment. Meta didn't immediately respond to a request for comment. Diem's website shows that its partners include venture capital firms such as Andreessen Horowitz, Union Square Ventures, Ribbit Capital, and Thrive Capital as well as Singapore state-owned investor Temasek Holdings Pte. Its website also lists crypto-focused companies like Coinbase Global Inc., and others such as ride-hailing company Uber Technologies Inc. and commerce platform Shopify Inc. In November, the federal watchdogs finally made it clearer what they were after. Stablecoin issuers should be regulated banks if the tokens are to be used as a means of buying and selling things, the President's Working Group on Financial Markets said in a report. The group of regulators said they feared what might happen if a vast network of a tech company's users suddenly began transacting in a new currency, and that combining a stablecoin issuer with a big corporation “could lead to an excessive concentration of economic power.”