Diem (formerly Libra), the stablecoin backed by Mark Zuckerberg’s Meta, hasn’t had the best start to the year. It appears that the Diem Association is selling off its intellectual property to Silvergate Capital for US$200 million, The Wall Street Journal reports, citing an unnamed source familiar with the matter.
Diem Fails to Receive Regulatory Approval
The Diem project was presented by Zuckerberg’s Meta (formerly Facebook) in June 2019, formed under the name of the Diem Association. The Libra stablecoin was meant to be backed by a handful of global currencies such as the US dollar, in similar fashion to the business model of Tether’s USDT or USDC.
The Diem Association secured Silvergate Capital, a bank that serves blockchain companies, as the exclusive issuer of the Diem USD. However, Zuckerberg was soon confronted with obstacles imposed by US regulatory bodies and abroad.
The lack of security and privacy was the main concern for regulators, warning off investors including eBay, Mastercard, Visa and PayPal – all of whom resigned as founding members in a single day. Zuckerberg then rebranded Libra to Diem, but it only made things worse.
Diem Association Trying to Repay Investors
The Diem Association is now selling its intellectual property to Silvergate to repay investors, which include tech and investment concerns such as Coinbase, Spotify, a16z, Ribbit Capital, and more high-profile institutions.
It wasn’t as if the news hurt the crypto community. We need to remember that Zuckerberg and his businesses have attracted controversial accusations ever since news broke in 2018 that Facebook had allowed Cambridge Analytica to harvest sensitive data from 87 million users.
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