Diem, the formidable crypto undertaking funded by Facebook has collapsed. The Diem Association confirmed that it’s promoting its belongings to Silvergate, the financial institution that had beforehand partnered with the group, and that it will “begin the process of winding down.” Bloomberg had reported talks of a sale final week. A Diem Association spokesperson alleged on the time that the report had unspecified “factual errors.”
Now that the sale is official, it marks the tip of a greater than two yr effort to launch the stablecoin championed by Mark Zuckerberg. Though the Diem Association was a separate group from Facebook and father or mother firm Meta, a lot of its funding got here from Facebook. “I believe that this is something that needs to get built, but I get that I’m not the ideal messenger for this right now,” Zuckerberg instructed Congress in a 2019 listening to about his cryptocurrency ambitions.
The group beforehand generally known as the Libra Association had reportedly hoped to launch its stablecoin final January. But it bumped into repeated roadblocks from lawmakers and regulators all over the world, and the undertaking was delayed and scaled again quite a few occasions. Among officers’ prime considerations was that Diem might be used for cash laundering and different illicit functions.
In an announcement, Diem CEO Stuart Levey blamed US regulators for Diem’s demise, and defended the group’s work to reduce danger with “industry-leading controls to protect consumers and combat financial crime.”
“Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead,” Levey. “As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate.”
It’s unclear what this implies for Facebook’s cryptocurrency pockets Novi, which launched a “small pilot” final yr with the Pax Dollar stablecoin. At the time, Facebook’s former crypto chief David Marcus mentioned the corporate remained dedicated to launching Diem. Marcus left the corporate a month later. Facebook didn’t instantly reply to a request for remark.