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Friday, May 20, 2022
Home Technology Facebook-Backed Crypto Project Diem Sold After Pushback

Facebook-Backed Crypto Project Diem Sold After Pushback


Facebook-funded digital money project Diem announced on Monday the closure and sale of $ 182-million (approximately Rs. 1,360 crores) for its technology, which includes an annual campaign that has caused much concern to regulators.

Facebook’s 2019 announcement of cryptocurrency design and payment systems promptly raised red flags for international finance officials, which raised a lot of criticism about the security and reliability of the private network.

“The idea that Facebook made cryptocurrency was a far cry from the regulators,” said analyst Rob Enderle of the Enderle Group.

“They have made it clear that they do not trust Facebook in what they are doing now, so they will not allow it to go into the money business.”

Diem Networks USA chief executive Stuart Levey said in a statement that the move was a step forward, but “it was clear from our conversation with the organization’s management that the project would not go ahead.”

“In the coming weeks, the Diem Association and its subsidiaries are expected to begin a process of closure,” the association said in a statement.

The technology was purchased by Silvergate Capital Corporation in California which is a go-to for crypto projects, and that puts the retail price of $ 182 million (approximately Rs. 1,360 crores).

Silvergate has purchased development, delivery, and operational infrastructure, as well as blockchain payment system-based payment tools and cross-border cable transfers.

“As far as I know, Diem is dead,” Enderle said.

Crypto boom

“As we made this effort, we sought feedback from governments and regulators around the world, and the project became more and more effective as a result,” the Diem organization said in a statement.

Facebook developed the technology, formerly known as Libra, and entrusted project management to a Geneva-based NGO.

After the revolt of a few major partners like PayPal, Visa, and Mastercard, the organization backed off its ambitions, before renaming itself as Diem by the end of 2020.

The so-called Stablecoin – a type of digital currency tied to other types of assets – has not been introduced. It is unknown at this time what he will do after leaving the post.

“The merger of a Stablecoin manufacturer or wallet provider with a trading firm could lead to a greater focus on economic power,” US regulators said in a 2021 report.

“These policy concerns are similar to those often associated with a mix of banks and commerce, such as the benefits of obtaining credit or using data to market or limit access to products,” the report said.

Facebook, which renamed itself, Meta, in October, has faced criticism for its top online position, yet it is not the only strong organization interested in crypto.

Creative Strategies commentator Carolina Milanesi wondered if Libra-turned-Diem, from the beginning, was part of Facebook’s vision of a metaverse platform.

“Cryptocurrency will come one way or another,” Milanesi said.

“Maybe that’s what Facebook relied on and decided to leave the head to someone else.”

People are already buying houses for sale in a fixed, tangible world called a metaverse.

The European Central Bank in July officially launched a pilot project to create a “digital euro,” in response to the growing popularity of electronic payments and the rise of cryptocurrencies.

Big banks are also responding to the growing digital payment system as spending continues to decline, epidemic-driven practice and the desire to avoid contact.

“There is a lot of mistrust surrounding cryptocurrency, and most of us in the industry are convinced that it is a great Ponzi scheme,” Enderle said.

Diem asset sales are “another red flag in crypto,” he added.

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