Meta-Founded Association Sells Cryptocurrency Venture To California Bank For $200M
Diem Association, a company Facebook founded as Libra in 2019 to manage its cryptocurrency initiative, will sell its technology to crypto-focused bank Silvergate Capital for $200 million
When Mark Zuckerberg announced the project, he said the cryptocurrency would serve as the foundation for payments across Facebook Messenger and WhatsApp. Zuckerberg convinced many companies to become founding members, backing the organization. Some include Visa, MasterCard, Uber, Lyft, eBay, Spotify, and Andreessen Horowitz.
The company planned to manage the technology via blockchain, with member organizations processing and verifying transactions. But within months, the association lost Visa, Mastercard, Stripe, and eBay.
David Marcus, the Meta executive who oversaw the launch, left the company last year.
Meta also ran into resistance in Washington when officials voiced concerns about the effect of the company's plans on financial stability and data privacy.
Federal Reserve Chairman Jerome Powell said the central bank had serious concerns, and Zuckerberg stood before Congress, where he defended Facebook’s plan.
Silvergate Capital, the bank, had reached a deal with Diem to issue some of the stablecoins backed by hard dollars and designed to be less volatile than bitcoin and other digital currencies, according to The Wall Street Journal. A deal with Silvergate as part of a revamp last year meant to appease regulators.
Zuckerberg, apparently, wants to create his own world with a separate universe -- the metaverse -- and a currency to go along with it.
Meta would have a universe where marketers could only buy advertising with cryptocurrency, and performance would rely on brands paying for every action their avatars took in this virtual world, tying it to real-world actions.
All these ideas have failed to materialize. Now the sale represents an effort to squeeze the remaining value from the defunct business.
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January 27, 2022 at 10:33AM