The token has been struggling to get approval from US regulators
Mark Zuckerberg’s attempts to develop a cryptocurrency have failed and been burned.
The Facebook-sponsored cryptocurrency, formerly known as Libra, was launched in 2019.
Facebook set up the Diem Association to manage the digital token, which has cemented partnerships with dozens of companies.
The cryptocurrency plan, which Mark Zuckerberg had defended in front of Congress, looked promising on paper, but ultimately failed to deliver on plans to create the payment system of the future.
The Diem Association is now selling its technology to Silvergate Capital Corp, a small California bank in the crypto space, for about $200 million.
This is according to a report in the Wall Street Journal, which did not reveal its source.
Bloomberg previously reported that Diem was considering selling its remaining assets to repay investors for their value.
So what was this once ambitious project and why did it fail?
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What is Facebook’s cryptocurrency Diem? Why is this project coming to an end?
Facebook wanted Libra to help develop a global payment system that would provide universal access to the financial system.
This ambitious but simple goal was quickly rejected by regulators and the traditional financial system, which is why Zuckerberg was called to Congress to defend it.
Facebook, which recently changed its name to Meta, announced plans to create a “stablecoin” called Libra in 2019. Its motto at the time was “act fast and break the rules”.
Libra was originally designed to be backed by a range of currencies and initially several companies partnered with it.
However, regulators were not pleased and Zuckerberg was asked to testify before Congress.
At the time, Facebook was under fire for misinformation on its platform, and all the negative press upset its partners. Companies began to withdraw their support.
To try and revive the project, Facebook renamed the token Diem and created a separate association to handle it. the Diem token is pegged to the US dollar and is usually used to buy and sell other cryptocurrencies such as bitcoin.
This didn’t work and Silvergate Bank stepped in to become the issuer of the Diem stablecoin, but the Federal Reserve said it would not approve it because it was “uneasy about the plans2”.
With the risk of a Fed crackdown hanging over the project, the Diem coin essentially ceased to exist, and so the project began to unravel.
Diem founder David Marcus also left Meta last year, as some of the team jumped ship.