Wed. May 25th, 2022

The Facebook-led Diem cryptocurrency project is preparing to sell its assets as the social media giant acknowledges a defeat in its once-extensive digital payment ambitions.

The Diem Association, which was launched by Facebook in 2019 and is supported by 25 businesses and non-profit groups, planned to round off, according to several people familiar with the discussions.

One person said the buyer of his technology was Silvergate Bank in California, 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 sought revenue sources to drive its future growth. The Silicon Valley group has been plagued by recent content moderation and privacy scandals, which have contributed to a decline in popularity for its major social networking 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 out some funds to the founding members of the initiative, which initially pledged $ 10 million to participate.

The beleaguered project has faced setbacks from regulators from the outset. It had a difficult origin when a wave of its founding members – including PayPal, Mastercard and Vodafone – cease within the first year after the project attracted regulatory investigations.

Especially watch dogs concern expressed about money laundering and monetary stability, given Facebook’s size. The company also had a setback over the Cambridge Analytica privacy scandal.

Formerly known as Libra, Diem initially tried to create a digital coin backed by a basket of real currencies. But in an effort to appease U.S. regulators, it his vision narrows in 2020 to focus on launching a dollar-backed one-by-one coin known as a stablecoin, and appointed former HSBC chief justice Stuart Levey as its first CEO.

In another final attempt to get regulatory approval in May, it has shifts its operations from Switzerland to the US and announced that Silvergate will become the exclusive issuer of its planned stablecoin and manage its reserves.

Nevertheless, the project still could not get the green light from US regulators and David Marcus, the founder of the initiative, Leaving Facebook at the end of last year.

Once finalized, a sale to Silvergate will bring Facebook’s biggest foray into finance to a compelling conclusion.

The company built Novi, a digital currency wallet, to hold the Diem coin. Novi was, however launched as a small-scale pilot in October using a coin from an external provider, the Paxos Dollar.

Meta has apparently shifted its focus to its crypto-related ambitions, and is working on projects that will enable users to buy and sell non-swinging characters – digital assets built on the blockchain.

People familiar with the plans said the Novi wallet was also crucial to those plans to break into a hype-fueled world of NFTs, the popularity of which rose last year to become a world market worth $ 40 billion.

Additional report from Leila Abboud in Paris and Kiran Stacey in Washington DC

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