Zuckerberg’s Dream of Launching the Diem Crypto Officially Dead

Diem, the cryptocurrency-backed by Mark Zuckerberg’s Meta is officially dead after regulators blocked it every step of the way.

After multiple rebrands, congressional hearings, and the departure of several high-profile staff, it was apparent that the crypto was primed for failure.

On Monday 31^st, the Diem Association announced the sale of its intellectual property and other assets related to the running of the Diem Payment Network to Silvergate Capital Corporation (“Silvergate”) (NYSE: SI).

In a statement, Diem Networks US (“Diem”) CEO Stuart Levey noted that despite receiving positive substantive feedback on the design of the network, it was clear from the dialogues it held with federal regulators that the project could not move ahead.

“As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate,” said Levey.

The association confirmed that it sold its assets for around 200 million dollars to Silvergate, a crypto-focused bank it was working with last year to launch a stablecoin pegged to the U.S. dollar.

The sale of the assets marked the end of a commitment that, in scrutiny, was conspicuously going to fail.

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Meta (formerly Facebook) had created apps that would have allowed people to trade the token. The company formed Libra Association as an arm to govern the crypto with other companies, but people were skeptical about this decision claiming it would give Meta more power.

Incidentally, members of the Libra Association began dropping out not long after the group had been formed.

Some members of the group feel that the project was politicized a lot. David Marcus, the former Facebook executive who created Libra and left late last year, left the following tweet:

Congrats to my former colleagues and friends, as well as to @silvergatebank. We all gave our whole hearts, blood, sweat and tears to what I will always call Libra. We were mission driven and were in it for the right reasons (that remain as valid today as they were then). https://t.co/UcRdYsfmMH

— David Marcus (@davidmarcus) January 31, 2022

Although the relationship between Meta and Diem is over, there is a chance that the company that bought its assets, Silvergate, or any other player in the field, revives the project.

This is particularly so because the Diem project was more transparent and regulator-friendly than a lot of existing stablecoins. But with nearly all of Libra’s founding team gone from Meta, the odds of Diem ever reemerging with the same level of backing it once had feel slim.

“With today’s sale, Silvergate will be well-placed to take this vision forward.  Over the coming weeks, the Diem Association and its subsidiaries expect to begin the process of winding down, but we look forward to seeing the design choices – and the ideals – of Diem thrive,” concluded Mr. Levey.