Zuckerberg’s three-year dream of issuing coins was shattered: a high-profile beginning, a tragic end, and bitter tears in the middle

For many years, Facebook seems to be a company whose “superstition” can change its fate by changing its name. It’s a pity that Mark Zuckerberg is not good at this. When he changed his name, his luck declined all the way.

Last Wednesday, Facebook announced its first financial report after officially changing its name to Meta. It closed at $323 per share on the day of the earnings report. After the earnings report was released, it fell all the way to $253 per share after the market, a drop of about 22%. If you read the financial report carefully, you will find that the Metaverse behind the name Meta is the culprit that “dragged down” this financial report-because of its huge investment in the metaverse field, its operating profit in 2021 will be reduced by about 10 billion USD, a net loss of USD 10.19 billion for the year. The news that the business will not be profitable in the short term has sent the stock price all the way down.

It can be said that this wave of name changes did not have any good effect. But this is definitely not the most “unlucky” name change. Behind another major name change of Meta is a story full of bitter tears. At the end of 2020, after Facebook announced that the digital currency Libra project would be renamed Diem, the beginning of the project was very good. The project of large global companies squeezed their heads and hugged their legs to join the project fell all the way to the bottom, and even officially marked a stop with the sale of business this week. . The whole story is full of tragic colors – the “betrayal” of allies, the “humiliation” of various governments, and the departure of the elite team, and this is not the worst part of Zuckerberg’s “coin issuance” dream.

The sale announced that the dream of issuing coins was broken
Now, when users open the official website of Libra (later renamed Diem), which Meta used to shout desperately in 2019, they will find such a pop-up advertisement, which is a statement issued by Diem CEO Stuart Levey:

The Diem Association announced the sale of its intellectual property rights and other assets related to the operation of the Diem payment network to Silvergate Capital Corporation.

“Through this transaction, we believe that Silvergate will be able to continue to advance the vision of Diem (promoting stablecoins). In the next short period of time, the Diem Association will gradually dissolve its subsidiaries.”

Notably, the Diem-accepting Silvergate bank was one of the first banks in the US willing to open an account for cryptocurrency trading back in 2014. In addition, this company is also an important strategic partner of Facebook after transferring the Diem project from Switzerland to the United States in 2020, and has become the exclusive issuer of Diem’s USD stablecoin at important nodes, and manages Diem’s USD reserves.

According to The Verge, the deal between Diem and Silvergate is valued at around $200 million.

Meanwhile, in the announcement, Diem attributed its failure to government obstruction. They stated in the announcement: “Although we have given positive and substantive feedback to the government’s questioning, we have found from communication with the US federal government regulator that this project has not been able to proceed normally. Therefore, for Diem, The best outcome is to sell it.” And after the deal, the Diem Association will gradually withdraw from the entire project.

At this point, Meta and Zuckerberg’s dream of issuing coins was officially announced. And this group of elite employees that Facebook has hunted around the world is also facing the end of the team’s dissolution.

Libra gets off to a bang
Although it ended badly, this project was almost born with a golden spoon in it.

In the summer of 2019, Facebook took a digital currency white paper like thunder, announcing that it will release the digital currency Libra and its supporting digital wallet Calibra in the second year. Although looking back carefully, to a certain extent, the stable virtual currency Libra was a challenge to various virtual currencies such as Bitcoin, which was chaotic and fluctuated at the time, but the news of giants joining the currency circle still made the “currency circle” at that time. The people of the faith felt unprecedented excitement and hope.

Unlike other cryptocurrencies at the time, the price of the stable electronic coin Libra did not fluctuate dramatically. To put it simply, according to the idea in the Facebook white paper at the time, the value of Libra will be linked to a fixed currency, and only the Libra Management Association has the power to issue and destroy currency according to currency exchange.

In addition, in the white paper, Facebook stated that in addition to being unable to mine at will, users cannot use Libra currency to be completely anonymous, nor completely untraceable.

These measures are largely aimed at reassuring the U.S. government and the Federal Reserve to eliminate opposition from government departments.

In the description, Facebook stated that its mission is to build a simple global currency and financial infrastructure that will be used for global payments and transfers in the future, making cross-border transfers as simple as sending a text message, and without all the complexity fee.

In addition to the white paper full of rhetoric, another important reason why the Libra project was able to attract the attention of the world at that time was that besides Facebook, Libra’s alliance companies were too powerful – from payment platforms Mastarcard, PayPal, Stripe, Visa to e-commerce platforms Shopify, eBay, Farfatch, to blockchain companies such as Coinbase, and even top Silicon Valley investment banks a16z, Union Square Ventures and Ribbit Capital are its supporters and participants.

It can be said that Facebook almost pulled half of Silicon Valley to cheer for it. And these small giants in the fields of finance and technology are also looking forward to a piece of the big layout that uses technology to subvert the traditional financial industry and even the status of legal currency.

A congressional inquiry turns the wheel of fortune
While the project had a prosperous start, it soon turned the wheel of its fortunes completely by a congressional inquiry.

In July 2019, shortly after the release of the white paper, Facebook faced opposition from numerous governments. The reason behind this is that governments of various countries are worried that their fiat currency will be impacted by Facebook’s currency issuance, and the United States is even more afraid that its global currency hegemony will be shaken.

The first country to stand up against it was France. French Finance Minister Bruno Le Maire said that the Libra digital currency should not be regarded as a substitute for traditional currencies. “It is impossible for Libra to become a sovereign currency,” he said, worrying that Libra may bring about issues such as privacy, money laundering and terrorist financing. In addition, he is also worried that the rise of Libra may even bring shocks and risks to the global financial system.

However, the biggest stumbling block for Facebook to issue coins came from the U.S. government.

In July 2019, the U.S. House of Representatives issued a request to terminate the Libra project. Then, the U.S. Senate Banking Housing and Urban Physical Committee held a hearing on the Libra project. At that time, it was Libra head David Marcus (see the picture below) who participated in the hearing.

David is mentioned because he is almost the soul of the Libra project. This executive is from Geneva, Switzerland, and this is also seen by many outsiders as one of the reasons why the Libra project was registered in Switzerland in the early days.

David has been in continuous business since 1996. The four companies it founded were all acquired. Finally, when Zong, the payment company he founded, was acquired by PayPal, he chose to join PayPal and became the chairman of PayPal within three years. At the time, he was pretty much the leader in payments among U.S. tech companies. After joining Facebook, he was in charge of the Messenger team, and eventually became the most important role in Zuckerberg’s dream of issuing coins, the Libra project leader.

In fact, this is not the first time Facebook has faced questions from the hearing in a short period of time at the time. The previous year, Zuckerberg had faced similarly tough questions about disinformation, data breaches and daring to vote. These past records have made the U.S. government’s trust in Facebook drop to a very low level at the beginning of Libra’s launch. Looking back at this tense inquiry today, I can still feel how sharp the questions raised by the lawmakers at that time were.

“How many elected lawmakers will stand up against Libra before Facebook will let it go?” asked Democratic Senator Sherrod Brown. On the same day, lawmakers continued to ask questions about the jurisdictional issues, privacy protection issues, and Facebook’s trust crisis brought about by Facebook’s coin offering.

Most of the doubts about jurisdiction in the U.S. Congress revolved around Facebook’s decision to set up Libra’s headquarters in Geneva, Switzerland. In the eyes of Congress, a U.S. company’s headquarters in another country is suspected of evading domestic financial supervision in the United States. At a deeper level, there is a crisis in the dominance of the dollar.

In response to the question of jurisdiction, Facebook compromised and moved the Libra headquarters back to the United States. But the crisis of confidence is much more difficult to resolve than the issue of jurisdiction can be easily resolved.

Senator Brian Schatz listed disinformation on Facebook’s platform, the concealment of data leaks to Cambridge Analytica, and the interference of political advertising during the election.

“There are so many companies in the world, why should we trust Facebook to do this? Should you solve your old problems first and then solve new ones?”

This hearing made Facebook understand that maybe Libra can issue coins, but Facebook, which is almost on the list of untrustworthy people in the eyes of lawmakers, must not issue coins. At the same time, the US government can accept giants in the financial industry, but it cannot tolerate the emergence of an oligarch that challenges the international status of the US dollar.

The fallout from the hearing has left the team devastated. Many central banks have chosen to strictly scrutinize Libra, and even directly opposed it. France and Germany have jointly stated their opposition to Libra’s introduction in Europe. Switzerland, where it was registered, announced that it would conduct a money laundering review on Libra. By September, Libra had received a joint inquiry from 26 central banks, including the Federal Reserve, in Switzerland. Growing political regulatory pressure has all but overwhelmed it.

Allies “betray” away
Such scrutiny also spilled over to its allies, causing them to back off and opt out. The U.S. government even directly issued an ultimatum to these allies who joined Libra, and even made similar censorship requirements.

The first to exit was David’s old employer, PayPal. On October 4, PayPal officially announced its withdrawal from the Libra Association. Just a week later, Stripe, Visa, eBay and Mastercard all quit the Libra Association. So far, the largest financial partners have all left.

There is another reason why the impact of the collective withdrawal from the group is so bad-at this time, there is less than a week left before the first Libra Council meeting in Geneva. It can be said that the first meeting has not yet opened, and the group is about to disperse.

Diem Survives with Broken Arm
In the following year, Libra did not get more support, but faced greater resistance.

Coupled with the fact that David and Zuckerberg were questioned against Facebook before participating in the hearing, they finally had to face the fact that Libra could only survive without Facebook, a giant with a bad reputation. In order to demonstrate the determination to cut off the relationship, in December 2020, Libra officially changed its name to Diem. As Libra changed its name to Diem, Libra’s wallet, Calibra, was officially renamed Novi. Meanwhile, in response to unavoidable regulation, Diem compromised and moved its headquarters from Switzerland back to the continental United States.

This name change serves two purposes. The first is to adjust the encrypted digital currency that previously pursued relatively stable purchasing power into a digital currency that seeks to maintain a stable exchange rate against the US dollar. Simply put, it is to become a compliant stable currency project that only anchors the US dollar as a currency. More deeply, this is also a huge compromise that Zuckerberg wants to reiterate to the U.S. government that he will not violate the interests of the dollar. At the same time, in order to make the dream of issuing coins come true, the renamed Diem officially separated from Facebook and operated independently.

David, who originally wanted to revolutionize the financial industry, also changed his mind at this time and said that they would subvert the payment industry and provide peer-to-peer cross-border payment services for people from all over the world.

However, the name change did nothing to change the project’s popularity, nor did it receive a positive response from any dissenting governments. The continuous downturn after the name change and the lack of progress accelerated the departure of the core members of the entire team.

In addition to the previous announcement of Diem’s ​​co-founder Kevin Well’s resignation, 2021 is the Thanksgiving holiday. The soul of David announced that he will officially resign at the end of 2021 and hand over the entire team to Stephane, which is the final announcement at the beginning of the article to dissolve the team and sell it. The person in charge of the project. When many souls withdrew, the morale of the team plummeted, and almost no one believed that there was still any chance for this project.

Then, until this week, the entire project finally came to an end and was officially sold to Silvergate. Looking back at the past three years, the entire project has gone through countless ups and downs, full of bitter tears.

Zuckerberg’s “Sheepskin”
It can be said that, regardless of Libra or Diem, the coin issuance project that Zuckerberg once talked about has come to an end. When people look back at it, they find that it is very likely that Facebook has been extremely enthusiastic about such financial “innovation” projects in recent years compared to the rapid technological innovation and research and development. It lacks substantial and solid technological progress, and is more about creating new concept.

In a speech against the Diem project, the German chancellor once called it a “wolf in sheep’s clothing”. It wants to challenge many existing orders. And the beneficiaries behind these challenges to the order may not be any country or civilian, but Facebook itself.

Senator Sherrod questioned at the Libra hearing that Facebook’s advancement of the Libra project, as always, reflects the company’s eagerness to make profits by exploiting privacy and violating moral laws, and the project itself cannot bring public welfare. “Facebook’s so-called disruptive innovation, innovation is almost gone, only the subversion of everything is left.”

Both Libra and the renamed Diem have come to an end, and Facebook has changed its name to Meta, placing the bet on the next new concept, the metaverse.

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