Meta cancels its Libra digital currency project, And why did the project fail?

Meta cancels its Libra digital currency project, And why did the project fail?

The Meta digital currency project has officially ended after Facebook founder Mark Zuckerberg was defeated by Congress.

 Meta-backed Diem has sold the intellectual property of the cryptocurrency Libra and other assets related to the payment network to Silvergate Capital.

The association said in a statement that Facebook's efforts, which are now "dead" to make payments and money transfers cheaper and faster, never appeared due to resistance from federal regulators.

According to Bloomberg, Diem is considering selling its assets to investors as a way to return capital.

It was later confirmed that Silvergate Capital had agreed to buy Diem's ​​assets for approximately $200 million and diem did not disclose the terms of the sale.

Meta cancels its Libra digital currency project, And why did the project fail?

why did the project fail

Facebook, the social media giant, has shut down Project Diem, following persistent opposition in Washington, due to a controversy over its direction.

The shutdown of the project, which would have created a way for users to pay for things and send money to each other without having to go through the regular financial system, came in reaction to the internal clashes and ongoing opposition in Washington.

past failures

The company has had previous failures, most notably an attempt to make a smartphone a decade ago, but the decision to scrap the project called Dim is the first that appears to be directly related to regulatory responses.

This suggests that bringing future products to market in highly regulated venues will be an uphill battle, people said. This could complicate Facebook's plans for the metaverse.

Luther Lowe, senior vice president of public policy at Yelp and a longtime advocate of tougher antitrust controls for the biggest tech companies, said:

"All this scrutiny is having an effect." "This is really important to watch now, because we're on the cusp of a new paradigm."

 But Diem's ​​project was doomed from the start. Which was announced in 2019 with great fanfare under the name “Libra”. Where the roadmap was that the digital currency would be indexed in US dollars.

But members of Congress and regulators immediately raised concerns about the project, saying Facebook was not prepared to address concerns about money laundering, consumer protection and other potential financial risks.

Two years later, after changing the brand name to “Dim” and reforming the design of the project so that it would be linked to the United States. To achieve greater stability, the project faced greater resistance from regulators, who said the company had acted arrogantly.

This failure comes as cryptocurrencies become increasingly popular, despite the recent drop in prices.

According to Pew Research, 16 percent of Americans have invested in or traded cryptocurrency, and apps like Coinbase and Robinhood make billions of dollars in cryptocurrency transactions on their platforms each month.

In recent months, Diem leaders have left the company, including project co-founder Kevin Weil and David Marcus.

Teams working on the project were notified of the closure nearly a week ago, while a crew of about 50 people remained to help operate the Facebook crypto wallet overseas.

Selling Diem Assets

The company will now sell Diem's ​​assets to California Silvergate Capital, which serves bitcoin and blockchain companies, for about $200 million, people familiar with the matter told the Wall Street Journal and Bloomberg News.

Internal problems also helped bring down the project, including conflicting visions between project manager David Marcus and his main backer, Mark Zuckerberg.

This has been since the 2016 US election, when the Facebook platform was exploited by Russian agents, and then in 2018, after political consulting firm Cambridge Analytica enabled the misuse of personal data of millions of Facebook users.

The company then faced a barrage of scrutiny from regulators all over the world. Privacy advocates say the company collects too much data, and antitrust experts fear it holds too much power.

Facebook groups have harbored anti-vaccine activists for several years, and their algorithms have enabled the spread of their ideas in a way that has helped prevent vaccines during the global pandemic.