American chartered bank Silvergate reportedly aims to purchase Diem‘s intellectual property for USD 200m, The Wall Street Journal reported, citing people familiar with the matter.
The Diem Association (previously known as Libra Association) is a Meta-led project that initially aimed to create a global digital currency.
Back in May, Silvergate Bank partnered with Diem to issue Diem USD, a stablecoin pegged to the US dollar – a deal meant to calm the regulators. Since the bank serves blockchain companies, the agreement was expected to help the already struggling project gain some strength. However, the US Federal Reserve remained skeptical and didn’t show the green light for the plan.
On Wednesday, reports suggested that Diem is trying to sell its assets in a bid to return capital to its investors.
This sale reported on today “represents an effort to squeeze some remaining value from a venture that was challenged almost from the start,” the article said.
Meta (aka Facebook) allegedly owns about one-third of the project, and the remainder is owned by uncited venture capital firms and technology companies.
The Libra project, unveiled in mid-2019, was initially backed by 18 top tech companies and venture capital firms, including Mastercard, PayPal, Booking Holdings, eBay, Andreessen Horowitz, Breakthrough Initiatives, and Ribbit Capital. However, following a massive regulatory backlash, some of the partners started leaving the project.
In December 2020, the Libra project rebranded to Diem and drew back from its ambitious goals, but still couldn’t stop the regulatory criticism. When the project launched a pilot program for its digital wallet Novi in October 2021, it received major backlash as well.
Specifically, in a letter to Zuckerberg, five US Senators said Facebook “cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient.”