Facebook-led cryptocurrency project Diem is preparing to sell its assets as the social media giant admits defeat in its former ambitions for digital payments.
The Diem Association, which launched on Facebook in 2019 and is supported by 25 non-profit businesses and groups, plans to end it, according to several people familiar with the discussions.
One man said the buyer of the technology was California-based Silvergate Bank for $ 200 million. The deal was first reported by the Wall Street Journal. Diem and Silvergate declined to comment. Facebook, which recently renamed its parent company Meta, did not respond to a request for comment.
Meta is looking for sources of revenue to fuel its future growth. The Silicon Valley group has been stung by recent scandals over content moderation and privacy, which has contributed to the decline in popularity of its main social media products Facebook and Instagram, a trend that threatens its $ 85 billion-a-year ad-based business model. .
The sale is likely to give Diem the opportunity to pay some money to the founding members of the initiative, who initially committed $ 10 million to participate.
The besieged project has been repulsed by regulators from the start. It had a difficult origins when a wave of founding members – including PayPal, Mastercard and Vodafone – left in their first year after the project gained regulatory scrutiny.
In particular, observers expressed concerns about money laundering and monetary stability, given the size of Facebook. The company also faced a backlash over the Cambridge Analytica privacy scandal.
Formerly known as Libra, Diem initially sought to create a digital coin backed by a basket of real-world currencies. But in a bid to reassure US regulators, she narrowed her vision in 2020 to focus on issuing a one-to-one-dollar coin known as a stable coin and hired former HSBC chief of staff Stuart Levy as his first CEO.
In another recent attempt to gain regulatory approval in May, he transferred operations from Switzerland to the United States and announced that Silvergate would become the exclusive issuer of the planned stable coins and manage its reserves.
However, the project still failed to get the green light from US regulators, and David Marcus, the founder of the initiative, left Facebook late last year.
If completed, the sale of Silvergate will bring Facebook’s biggest foray into finance to a horrific end.
The company built Novi, a digital currency wallet, to hold the Diem coin. However, Novi was launched as a small pilot in October with the help of a coin from an outside supplier, the Paxos dollar.
Meta seems to have shifted its focus to its crypto-related ambitions by working on projects that would allow consumers to buy and sell irreplaceable tokens – digital assets built on blockchain.
People familiar with the plans said Novi’s portfolio was also crucial to these plans to break into the noise-fueled world of NFT, whose popularity grew last year to become a $ 40 billion global market.
Additional reports from Leila Abboud in Paris and Kieran Stacey in Washington