Diem Association, the consortium founded in 2019 to build a payment network linked to the cryptocurrency promoted by Meta Platforms Inc (NASDAQ:FB) has reached an agreement to sell its technological assets to Silvergate Capital Corp (NYSE:SI) for $200 million. Silvergate focuses on bitcoin and blockchain companies.
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Foiled Plans
As reported by The Washington Post, Libra —as it was known initially— sought to create a digital currency backed by a basket of currencies. However, given the pressure from regulators, it ended up being backed solely by the dollar to offer more stability.
In 2020, the consortium hired Stuart Levey, a former U.S. Treasury official and lead counsel for HSBC Holdings plc (LON:HSBA), who as CEO dropped the Libra name in favor of Diem.
Also, last May, the group moved its operations from Switzerland to the U.S. and announced that Silvergate would become the exclusive issuer of its stablecoin and manage its reserves. However, the project is yet to gain approval by U.S. regulators while David Marcus, the brains behind the initiative, left Meta late last year.
Thus, with the sale of its assets, the platform falls apart less than three years after the public presentation of Libra, the cryptocurrency backed by reserve assets aimed at Facebook and WhatsApp users.
Imploding
The Washington Post reports that “Internal troubles also helped scuttle the project, including clashes of vision between its leader and chief backer, former Facebook vice president Marcus, and CEO Mark Zuckerberg, one of the people said.”
“Marcus, a well-liked executive who was formerly president of PayPal, announced his resignation in November —just two months after he had traveled to Washington to pitch the recently rebranded project to journalists and regulators.”
According to Bloomberg, Meta owns about a third of the consortium and the rest is owned by association members, which include venture capital firms and technology companies caused Facebook to decide to change focus and rename the project to Diem.
Meta is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.
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