Diem Foundation to Sell Facebook’s Stalled Stablecoin Project
The Facebook-backed Diem (formally called Libra) cryptocurrency project is coming apart at the seams following an onslaught of regulatory pressure and backlash from all corners.
According to a Jan. 26 Bloomberg report citing ‘people familiar with the matter’, the Diem Association is preparing a sale of its assets in order to return capital to its investor members.
It added that Diem is currently in discussions with investment bankers in an effort to offload its intellectual property. The Association also needs to reassign the developers that have worked on the now-defunct cryptocurrency project.
Diem Crashes and Burns
Facebook’s (FB) rebranding to Meta last year has signaled that its ambitions extend way beyond social media but it still cannot shake that tarnished reputation. It was its reputation of abuse of personal data, publishing of scams and fake news, and a number of other cases where the platform was influential in social unrest that brought so much heat on Diem.
The company unveiled the concept of its own stablecoin in June 2019 and formed a global consortium of big-name backers to support it. However, scrutiny mounted across the world, and CEO Mark Zuckerberg was called to testify in front of congress. Following that, a number of those big partners ditched the project and pulled out of the association.
Furthermore, Diem founder and head David Marcus left the company at the end of last year following the departures of several other founding members.
Back in May, a deal was made with Silvergate Capital and its banking affiliate to issue the Diem dollar-pegged digital asset but the U.S. Federal Reserve put up an insurmountable wall of resistance.
The stalled stablecoin platform may not even find a buyer and there are no details of the specifics of what the company is actually trying to sell.
In October last year, the company also launched a pilot for a cryptocurrency wallet called Novi that would not handle Diem, but an alternative stablecoin called Paxos.
Stablecoin Scrutiny Escalates
The stablecoin sector has surged over the past year with the total market capitalization of all stablecoins increasing by 430% to $1.75 billion over the past 12 months.