Meta's crypto project Diem to shut down after pushback from regulators
With the liquidation of Diem's assets, the cryptocurrency project comes to an end.
Diem was first pitched as Libra in 2019 by Facebook as a global stablecoin.
Diem, the cryptocurrency project backed by Meta CEO Mark Zuckerberg , is shutting down. Diem's CEO Stuart Levey announced on Monday the sale of Diem's assets, citing continuing resistance from federal regulators.
Diem's intellectual property and other assets related to the running of the Diem Payment Network were sold to Silvergate Capital, according to a news release issued by the Diem Association, which oversees the digital currency. Last week, Bloomberg reported that Diem was considering liquidating its assets in order to return capital to investors.
"As we undertook this effort, we actively sought feedback from governments and regulators around the world," Levey said in a statement. "Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with [US] federal regulators that the project could not move ahead."
The sale effectively puts an end to the Meta-backed cryptocurrency project. Meta, which until recently was known as Facebook , provided about a third of the funding for the project, according to unnamed sources cited in Bloomberg's report. The rest of the funding came from a variety of investors including Uber, Shopify and Union Square Ventures.
"Today's decision was made by the @DiemAssociation which is independent from Meta," wrote Stephane Kasriel, head of Novi, Meta's cryptocurrency wallet, in a series of comments posted on Twitter. "We hope that the Association's sale of their assets to @silvergatebank will allow the project's vision to live on."
Kasriel added that Meta is continuing to execute on its "existing fintech plans to create economic opportunities and champion greater financial inclusion today, and as we look ahead to the metaverse."
A spokesperson for the Diem Association declined to make further comments on the sale to Silvergate.
Since its inception, first under the name Libra in 2019, when Meta was still called Facebook, Diem faced challenge after challenge. Five of its founding partners, including Visa, Mastercard, PayPal and eBay, left the project shortly after its launch. On the regulatory front, Meta's crypto project failed to find favor among legislators in Washington, some of whom publicly urged Zuckerberg to end Diem.
The sale of Diem's assets to Silvergate comes at a time when many other companies, including Jack Dorsey's Square, are getting into crypto and the popularity of digital currencies is going mainstream.