Facebook's Crypto Venture to Wind Down After Sale to Silvergate

Meta Platforms Inc-backed Diem Association sold its assets to crypto-focused bank Silvergate Capital Corp, Diem said on Monday, ending the tech giant’s ambitious push to get its billions of users transacting in its own currency.

Silvergate said in a separate statement that it had paid $182 million for Diem’s intellectual property and other assets.

The sale was the culmination of several years of struggle for Meta’s fintech unit, which lost most of its leadership, including director David Marcus, amid an exodus of staffers in the fall.

It also throws into question how Meta plans to handle commerce in the metaverse, a futuristic digital environment that chief executive Mark Zuckerberg has heralded as “the successor to the mobile internet.”

Although visions for the metaverse differ, many early projects involve transactions for digital goods and services using cryptocurrencies.

The Diem project, initially called Libra when it was unveiled in 2019, almost immediately ran into fierce opposition from regulators concerned that it could give Facebook too much control over the money system and infringe on users’ privacy.

In its quest for regulatory approvals, Facebook renamed both the digital coin and the wallet it was building to process transactions, now called Novi.

It also radically scaled back plans along the way, relocating Diem’s operations from Switzerland to the United States and making the goal to create a US stablecoin pegged to the dollar.

For now, Meta is testing Novi in Guatemala and the United States using the stablecoin Pax Dollar, while continuing to face pushback from a group of US lawmakers who say the company cannot be trusted to manage cryptocurrency.

Meta reports fourth-quarter earnings on Wednesday and plans to break out results of its metaverse-oriented hardware unit for the first time.

• Reuters with additional editing by Jim Pollard