Facebook Diem: Move Fast, Break Things, Then Crash Into a Wall

Facebook’s sudden announcement of the Libra stablecoin on June 18, 2019 was the epitome of its old motto, “move fast and break things.”

Thirty-one months later, the sputtering project finally ground to a halt, having crashed into political opposition, financial fears, abandonment by allies, regulatory blockades thrown up in the U.S. and around the world, and most of all the reputation for ignoring and abusing privacy that both Facebook (now Meta) and CEO Mark Zuckerberg have acquired over the years.

On Jan. 25, Bloomberg reported that the Diem Association that manages the now-renamed and much-reduced project is trying to sell off its intellectual property and find new homes for its cryptocurrency and blockchain engineers.

Read more: Facebook Eyes Sale of Diem Assets

It’s an ignominious end for the project that set out to create a fixed-value cryptocurrency that would be instantly usable for payments and money transfers across Meta’s three major platforms, Facebook, Instagram, and messaging service WhatsApp, and their then-2.7 billion combined customers.

Road Ends

That the stablecoin’s road was ending had been clear for months, after Facebook’s front man on the project, David Marcus, announced his departure from Facebook on Nov. 30, saying “my entrepreneurial DNA has been nudging me for too many mornings to continue ignoring it.”

It was a sad echo of the first sign of Libra/Diem’s failure: the first of the project’s original 25 supporters to bail out was PayPal, a firm he once led.

See: David Marcus Departs Facebook, Along With the Last Remnant of Libra’s Battered Brand

The announcement on Dec. 10 that Meta’s WhatsApp messaging service had dumped Diem, hooking up with the independent Paxos stablecoin as a payment tool across its network of two billion users, was just piling on.

Read also: Is Paxos the New Diem? The Stablecoin Issuer’s Facebook Pilot Just Expanded to 2B WhatsApp Customers

That said, the obstacle’s the project faced were clearly visible from the start as one of the first things the project to create a stablecoin that would be instantly usable by Meta CEO Mark Zuckerberg’s billions broke was the temper of leading central bankers, finance ministries and most of the U.S. political establishment.

Who’s Driving?

Even at Libra’s launch, Facebook tried to distance itself from control of the project, collecting a group of backers including cryptocurrency investors, nonprofits working with the world’s poorest, and top-tier payments firms including Mastercard, Visa, and PayPal.

Also along for the ride were cryptocurrency exchange Coinbase, venture capital firm Andreessen Horowitz, eBay, mobile service provider Vodafone, payments firm Stripe, as well as Mercy Corps and Women’s World Banking.

Oh, and Facebook? It was just another passenger in the form of its Calibra project, which would build the digital wallet its billions of customers would use to transfer and receive Libra payments.

It would have just one vote on the 25-member governing Libra Association — which was renamed along with the stablecoin on Dec. 1, 2020, when the project lowered its ambitions, planning a series on nation-specific stablecoins pegged to each country’s fiat currency

Facebook tried the rename game itself, relabeling its Calibra digital wallet Novi.

Shiny and New

The goals sounded good and high-minded.

“We’ve seen internet change the game for everything that could be digitized, except for money,” said David Marcus, Facebook’s blockchain head and the front man for the project.

“The numbers really speak for themselves. There’s 1.7 billion people around the world that are unbanked, the same number are underserved by financial services,” said Marcus, a former president of PayPal. “Now, anyone with a cheap smartphone has access to all the info they want in the world for free with a basic data plan. Why doesn’t money work the same way?”

However, no one bought the help-the-poor narrative for a moment. Control of a stablecoin useable by 2.7 billion people in almost every country on earth would be tantamount to becoming the world’s central bank.

And the powers that be were having none of it.

See also: What The Launch Of Facebook’s Libra Means For Payments

Turn Off Your Engine

French finance minister Bruno Le Maire, stood at the barricades as warnings that Libra — and by proxy Facebook CEO Mark Zuckerberg — would destabilize national economies, bypass national currencies, worsen bank runs, and drive off with the tools used to stabilize financial crises roared in from all quarters.

Speaking with “plenty of clarity,” Le Maire said “we cannot authorize the development of Libra on European soil.”

But it was Ohio Democrat Sherrod Brown who waxed most eloquent on the subject.

“Like a toddler who has gotten his hands on a book of matches, Facebook has burned down the house over and over and called every arson a learning experience,” Brown said at a Senate Banking Committee hearing a month after Libra launched. “It takes a breathtaking amount of arrogance to look at that track record and go, you know what we ought to next? Let’s run our own bank and our own for-profit version of the Federal Reserve, and let’s do it for the whole world.”