Mark Zuckerberg’s Crypto Project Diem Seeks to Refund Investors

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Facebook-backed digital currency project Diem may sell its assets due to regulatory pressure, Bloomberg reported. Diem is in talks with investment banks on how best to sell his intellectual property and cash in on any remaining value, according to the report. Riddled with regulatory hurdles, Facebook crypto chief David Marcus left the company last year. Sign up here for our daily newsletter, 10 things before the opening bell.

Regulatory pressures have stalled Facebook’s once-ambitious Diem cryptocurrency project.

The company, formerly known as Libra, is now considering selling its assets as a way to repay investors, Bloomberg reported on Tuesday.

Diem, which was due to launch a trial last year, is currently in talks with investment banks on the best approach to sell its intellectual property and buy back any remaining value, according to the report, citing people familiar with the matter.

It’s unclear how Diem’s ​​intellectual property would be valued by potential buyers or the engineers behind the project. Talks are in their early stages and there is no guaranteed buyer, according to Bloomberg.

Bitcoin lawyer Jack Dorsey reacted to the report by tweeting: “carpe diem”.

Diem, an ambitious venture announced by Facebook (now Meta) in 2019, was to function as a digital currency and be an alternative to the US dollar and other foreign currencies run by governments.

The original plan was for it to be backed by a broad mix of currencies and government debt. But due to concerns from regulators that it could upset financial stability and evade user privacy, Facebook said it would only launch as a unique dollar-backed coin.

CEO Mark Zuckerberg even testified before Congress in October 2019, saying Diem would not be released until he received full regulatory approval from the United States. But the stablecoin project repeatedly slipped under the regulatory radar despite the number of major backers like Mastercard, Visa and PayPal ultimately dropping Diem after review.

Eventually, internal disruptions appear to have doomed the project as Facebook’s chief crypto, David Marcus, left the company last year.

The Diem Association had agreed with crypto bank Silvergate Capital to issue its stablecoin, but opposition from the Federal Reserve has stalled the latest efforts, Bloomberg reported. Fed officials have told Diem advocates they are not comfortable with the plan and cannot let it go ahead, sources told Bloomberg.

Diem Association did not immediately respond to Insider’s request for comment.

In November, the Joe Biden administration released a report calling on Congress to regulate stablecoins if they are to be used as a medium of exchange. He also warned of excessive power that could come from a commercial entity that acts as a stablecoin issuer.

“The combination of a stablecoin issuer or wallet provider and a commercial enterprise could lead to excessive concentration of economic power,” the president’s Financial Markets Task Force said in the report.

Read more: Circle founder Jeremy Allaire explains why he thinks bitcoin will eventually overtake gold to hit $1 million — and charts his own course to testify before Congress last year as the one of crypto’s ‘adults’

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