Facebook’s controversial crypto project Libra (Diem) is over


Active Trader
Dec 11, 2020
The regulatory pressure spells an end to Mark Zuckerberg’s controversial crypto currency project, as the Diem Association, which looks after the development of the Diem digital coin, is considering a sale of its assets, a Bloomberg report reveals.

According to anonymous Bloomberg sources, the Diem Association is in talks with investment banks regarding the sale of intellectual property involved in the project, among other assets, in an effort to salvage whatever it can. According to the report, the Diem Association is also looking for a new job for the software architects, who created the technology behind Diem in the first place.

With the planned sales, the Diem Association wants to raise enough funds in order to return sufficient capital to investors.

The talks are apparently in an early stage and no clear buyer has emerged yet. Even if the Diem Association finds a buyer however, it remains questionable how the intellectual property behind the project will be valued.

For the time being the Diem Association and Facebook’s parent company Meta have declined any comments.

Meta owns about one third of the Diem project, while the rest of the shares are held by Andreessen Horowitz, Union Square Ventures and Ribbit Capital, among others.

Formerly known as Libra, the Mark Zuckerberg’s crypto currency project has been plagued by regulatory pressure ever since it was introduced to the general public back in June 2019.

Initially, the plan envisioned a universal stable coin, backed by a basket of fiat currencies and government bonds, with which all Facebook users – currently well over 2.6 billion – should have been able to buy goods and services over the social network.

Many central banks and world governments however, were spooked by the project, because of the huge impact such a currency might have had on the global financial system, as well as the potential money laundering issues.

In light of those concerns Mark Zuckerberg scaled back the project to the idea of multiple stable coins, each paged to a fiat currency, in addition to a single multi currency coin.

Finally the project took shape as a single stable coin, pegged to the U.S. dollar and named Diem USD.

The project was also backed by Visa, Mastercard and PayPal, but because of the regulatory pressure, many of the initial investors backed off.
Frankly, I am surprised it even lasted this long, considering how hard the pushback from institutions was.