Mark Zuckerberg’s dream of a Facebook digital currency is officially over. The technology behind cryptocurrency Diem has been sold to California bank Silvergate for a total of $182 million. With the purchase, Silvergate wants to continue trying to release digital money tied to the dollar, as the bank announced on Tuesday night.
The project originally developed on Facebook was presented in June 2019 under the name Libra. The plan was ambitious: A global digital money that can be bought with different national currencies and exchanged back again. Libra should be secured by a basket of various currencies.
But a front of regulators and governments immediately opposed the plan, fearing money laundering and a destabilization of the global financial system. Facebook pledged not to launch the digital currency until all regulators’ concerns have been resolved.
In autumn 2019, Facebook ceded control of the project to an association based in Switzerland and was content to be just a member there. However, initial “founding partners” such as Visa, Mastercard, Paypal and Ebay dropped out right from the start of the alliance.
In an attempt to change the mind of the regulators, the concept was changed: Instead of being freely exchangeable, Libra digital money should only be linked to a specific currency. Further measures against money laundering and terrorist financing were also planned. However, resistance from the US Federal Reserve, among others, was never overcome. Renaming Libra to Diem (“Day” in Latin) in December 2020 didn’t help either.
It became clear at the end of last year at the latest that Facebook founder Zuckerberg was ready to give up when his confidante David Marcus left the group. The former boss of the PayPal payment service was considered the father of the Libra project.
Silvergate will pay Diem $50 million in cash. In addition, the Diem Group will receive a good 1.2 million shares in the bank, which results in a value of 182 million dollars at the most recent price.