Zuckerberg defended it Facebook’s cryptocurrency is collapsing

A controversial cryptocurrency project defended by Facebook founder Mark Zuckerberg is collapsing in front of Congress after regulatory pressure. More than two years after its first announcement, the company-sponsored cryptocurrency appears to be about to expire.

Diem, a cryptocurrency initiative formerly known as Libra backed by Facebook owner Meta, is considering selling its asset as a way to return capital to member investors.

Diem is also in negotiations with investment bankers on the sale of its intellectual property. And you want to find a new job for the engineers who developed the technology. You also want to recover any residual value in your Diem coin project.

And when, in 2019, Facebook first unveiled the idea of ​​its own stablecoin that aims to revolutionize global financial services, has done so in collaboration with dozens of other companies.

Facebook founder Mark Zuckerberg (Reuters)
Facebook founder Mark Zuckerberg (Reuters)

But the union wasn’t enough to protect the project from global regulatory scrutiny. After Zuckerberg was called to testify, some of the partners abandoned the project and changed its name in Diem.

Diem’s ​​ambitions have also vanished and its founder, David Marcus, left Meta last year. The association entered into an agreement with Silvergate Capital to issue Diem. But resistance from the US Federal Reserve dealt a fatal blow to these efforts.

The Diem Association said in May that a subsidiary of Silvergate Capital was to be the issuer of the stablecoin Diem USD, a type of cryptocurrency pegged to the US dollar generally used to buy and sell other cryptocurrencies.

After a long period of discussions between Diem’s ​​supporters and regulators, Fed officials told Silvergate Capital that the agency was uncomfortable with the plan. He could not reassure the company that he would allow this activity.

Without the via free of the Fed, Silvergate Capital is not in able to issue the new asset with the certainty that the Fed will not take drastic measures.

The cryptocurrency defended by the Facebook founder is collapsing

It’s unclear how a potential buyer would appreciate Diem’s ​​intellectual property, or the engineers who helped develop it.

Meta owns about a third of the project and the rest is owned by the members of the association. The members of the association, which includes venture capital firms and technology companies, decided to invest and pay to join when the association was formed. It is not clear which companies, besides Meta, have invested in the initiative.

Diem explains that his partners include venture capital firms. In addition to Singapore state investor Temasek Holdings Pte.

Facebook
Facebook

The President’s Working Group on Financial Markets said in a November report that the issuers of stablecoin should be subject to regulation if i token they are used as a means of buying and selling things.

The group of regulators said they feared what could happen if a large network of users of a tech firm suddenly began dealing with a new currency and combining a source of stablecoin with a large company it could lead to an excessive concentration of economic power.

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