Rumors circulated last week that Facebook’s parent company and its partners are looking to exit its troubled cryptocurrency project.
Well, it turns out the grapevines were correct. Mark Zuckberberg’s cryptocurrency Diem will not see the light of day.
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Diem, a cryptocurrency backed by Meta, is shutting down after a series of rebrands, public hearings, and high-profile staff departures.
No Love Lost
Diem announced on Monday that it was selling its technology to California crypto-focused lender Silvergate to the tune of $182 million, capping a multi-year effort that had alarmed regulators.
In a report published earlier this week, Bloomberg said the Diem Association — the body in charge of digital currency — is considering selling off some of its holdings in order to return capital to investors.
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This is still a very early stage of discussions about how to go about “auctioning” its intellectual property, according to Bloomberg, and where the software programmers who created Diem might go to find another source of livelihood.
The Odyssey Ends
After a nearly three-year crusade, Facebook and its partners have rolled out Diem, an exclusive digital currency that was originally known as Libra in 2019.
Despite the efforts of Diem’s backers, they were unable to make an impact on their campaign even after they went around to patch a new identity of sorts to the project, downplayed the involvement of Facebook, and trimmed their expectations for a single digital currency.
Many assumed something bad will probably happen after David Marcus, Meta’s mouthpiece, extricated himself from the project late last year, as well as other key personalities in the picture.
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“The project could not move forward” after recent discussions with federal regulators, Diem CEO Stuart Levey said in a press release, so the decision was made to dispose of it.
The US Federal Reserve was already known to be there to block Diem from taking flight.
Writing Was On The Wall
Facebook’s disclosure in 2019 of plans to develop a cryptocurrency triggered the early warning sirens for global finance bigwigs, many of whom expressed concerns about the privacy and security of a virtual currency that is shrouded in doubt.
According to analyst Rob Enderle of Enderle Group, the idea of Facebook creating its own cryptocurrency and payment system was “a bridge too far” for regulators.
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A group of five Democratic lawmakers asked Meta CEO Mark Zuckerberg to halt the Diem project after Meta launched a cryptocurrency wallet called Novi.
Meanwhile, the Fed and the European Central Bank (ECB) have started exploring unveiling their own digital currencies — work that has been fast-tracked in part because of jitters about Diem.
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