Thursday, May 19

Facebook abandons its cryptocurrency project

The Diem association, which is piloting the digital currency project launched by Facebook (Meta), will dismantle itself and sell its intellectual property rights and other assets to Silvergate Capital Corporation for $182 million.

This initiative with which the American social media giant wanted to revolutionize payments was on the right track, but “it had become evident during our discussions with the American authorities that the project could not go any further”, justified the director general of the association, Stuart Levey, in a press release on Monday.

Meta had entered the arena of digital currencies by creating “Libra” in 2019, which was to offer a new method of payment outside traditional banking circuits. Aware of regulators’ concerns about a currency managed by a private company, the American group then decided to entrust its management to an independent entity, based in Geneva (Switzerland).

After the defection of several major partners such as PayPal, Visa and Mastercard, the organization had revised its ambitions downwards, before renaming itself Diem at the end of 2020. “From the outset, Project Diem sought to harness the benefits of blockchain technology to design a better and more inclusive payment system”, Mr. Levey pointed out on Monday.

The association has managed to build and test a technology-based payments system that also runs bitcoin, which includes safeguards against its use by criminals, he said. In parallel, “We have actively sought feedback from governments and regulators around the world, and the project has evolved and improved significantly as a result”, noted the official.

But the talks eventually broke down and “the best way forward was to sell the assets of the Diem group”, a conclu M. Levey.

The association and its subsidiaries will begin to dismantle “in the next weeks”, he specified. Silvergate said in a separate statement that it would pay $50 million in cash and return approximately 1.2 million new shares to him for a total amount equivalent to $182 million.

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