David Marcus, the former head of Meta’s Libra stablecoin project, said that the reason for the failure was not economic or technical problems but political pressure from regulators. In a post titled «How Libra was destroyed», he described how the company had to cancel its ambitious plans due to problems at the highest level.
«It was a 100% political murder», — wrote Marcus, and added that US officials saw Libra as a threat to the stability of the dollar and the financial system.
In 2019, the then Facebook (now Meta) introduced a cryptocurrency project aimed at providing financial services around the world. The Libra launch was joined by such giants as Mastercard, PayPal, Uber, and Spotify. However, due to opposition from regulators, partners quickly began to leave the initiative one by one. Supervisory agencies expressed concern over risks such as money laundering and consumer protection.
According to Marcus, the fateful moment was the decision of US Treasury Secretary Janet Yellen to tell Federal Reserve Chairman Jerome Powell that supporting Libra would be a political disaster.
In January 2022, Meta officially closed the Diem project (as Libra was renamed) and sold its assets to Silvergate for $182 million.
«It was not a legal or regulatory defeat. It was a policy that forced banks and partners to refuse to cooperate,» Marcus summarized.
By the way, he continues to work on new fintech solutions in his company Lightspark. It is working to create an innovative infrastructure for the Lightning Network, a global platform for fast and scalable payments based on bitcoin. Lightspark’s mission is to make online financial transactions accessible, secure, and convenient for everyone. The company offers transaction management tools that allow businesses to scale their operations and implement the latest technologies in financial systems. Lightspark is headquartered in Los Angeles.
The project team includes Nicholas Cabrera — Vice President of Product, former Chief Product Officer Bakkt crypto platforms. He has experience in management at eBay, PayPal, and developing digital wallets at Westfield Labs/OneMarket.
Also, Christian Catalini — Chief Strategy Officer and co-founder of Diem and founder of the MIT Crypto Economics Lab. He is a researcher in the field of cryptoeconomics whose work has been published in leading scientific journals.