On Jan 31, 2021, the Meta Inc-backed Diem Association sold its assets to Silvergate Capital Corp. The selling out is an indication that Meta’s ambitious push to generate billions of user transactions in its own currency has officially come to an end.
The Unprecedented Sale
As per reports, Diem Association sold its assets for around $200 million to Silvergate Capital. In 2021, the former company was working with the latter to launch a stable coin pegged to the US dollar.
In a press release, Stuart Levey, CEO of Diem, stated that “The decision to sell came after it became clear from our dialogue with federal regulators that the project could not move ahead.” However, in a separate statement, Silvergate Capital stated that it had paid $182 million for Diem’s intellectual property including other assets.
Reason behind Diem’s Downfall
Reports suggest that the sale was a culmination of years of struggle for Meta’s fintech unit. Moreover, since its emergence, the company lost most of its leadership, including the director David Marcus. In addition, members of the association began quitting within a few months of its formation.
In the past, Meta (formerly known as Facebook), created apps that would have been the major way in which people used the token. Even though Meta formed the Libra Association to govern the token with other companies, people were frightened that Libra would just boost Meta Inc.’s power.
The Rise and Demise of Diem
Initially called Libra, Meta unveiled the Diem project in 2019. The Libra Association emerged during the period when stablecoins were a relatively new idea and not closely scrutinized by regulators.
The project was vehemently opposed by regulators who were concerned that it could empower Meta into having too much control over the money system and infringe on users’ privacy. In order to seek regulatory approvals, the company renamed the digital coin and the wallet it was building for transactions (Novi Wallet). Although Meta has officially cut ties with Diem, the sale might be the potential to revive the project. Diem’s design was more transparent and regulator-friendly than various existing stable coins. Nevertheless, the odds of its reemergence are very slim. With Diem’s exit, Meta has strived not to enforce its trove of cryptocurrency patents against other crypto developers.