The project’s operator, the Diem Association, announced the sale of the cryptocurrency venture’s assets to Slivergate Capital Corporation for $182 million.
The project, which began in 2019 as Libra, rapidly encountered criticism from policymakers.
According to the group, “conversation with federal regulators” revealed that the project could not proceed.
“As a result, the best course of action was to sell the Diem Group’s assets, which we did today to Silvergate,” Diem CEO Stuart Levey stated.
Diem was meant to be a stablecoin, which is a type of cryptocurrency that, as the name implies, is expected to be less volatile, with its value linked to less volatile assets such as national currencies or commodities.
But that didn’t stop the venture from being a source of concern.
“This is an alternative money,” Prof Ross Buckley of the University of New South Wales told the BBC in 2019, cautioning that it was unlikely to receive the same level of regulatory approval as an in-game currency.
Prof Buckley and colleagues stated in a research study that the currency was “the ultimate example of something that is highly likely to move from “too tiny to care” to “too big to fail” in a very short amount of time.”
David Marcus, the former head of Facebook’s crypto division and co-creator of Diem, remarked on Twitter that the idea may go better with a more “acceptable” promoter.
“Regulator antipathy put an end to the Diem experiment,” according to the Financial Times.
Diem was a “threat to the current quo” because of Facebook’s size, the newspaper argued, and it was astonishing the company had not anticipated the concerns.
“One of our biggest priorities in establishing the Diem Payment Network was bringing in measures to protect it against misuse by criminal actors,” says Stuart Levey, founder of Diem.
“A prohibition on anonymous transactions, which represent both a sanction and a money-laundering danger, was one of these regulations.”
“We look forward to seeing Diem’s design choices – and values – grow,” Mr Levey said.
Novi, Meta’s digital wallet project, is led by Stephane Kasriel, who tweeted that the business “will continue to execute on our existing fintech ambitions to create economic possibilities and support greater financial inclusion now, and as we look forward to the metaverse.”