Former Facebook blockchain project leader: Diem project forced to terminate due to political pressur

A former Facebook executive explained the failure process of the company's stablecoin and memory blockchain project Diem (formerly known as Libra), which ultimately led many team members to turn to other memory blockchain projects.

According to David Marcus, former Diem executive and former Coinbase board member, the political conspiracy behind the scenes was the failure of the project, which he referred to as "100% political strangulation" in a lengthy article on X. He wrote:

The government or regulatory agencies no longer have any legal or regulatory means to terminate the project. This is 100% a political strangulation - carried out by intimidating banking institutions that are subject to the government

According to Marcus, despite "working and revising continuously for two years to appease lawmakers and regulatory agencies" and receiving limited support from some members of the Federal Reserve, including Chairman Jerome Powell, the Diem project still faces strong opposition from Treasury Secretary Janet Yellen at the political level. She reportedly warned Powell at a biweekly meeting that allowing the project to continue would be equivalent to "political suicide" and that she would not support him politically.

Marcus said that although he has reservations about the rumor, he still believes that Yellen's opposition was the fatal blow that led to the failure of the Diem project, "... this is actually the moment when Libra was killed.

Marcus continued, "Shortly after that, the Federal Reserve organized a conference call with all participating banks, and the Federal Reserve's General Counsel read out a pre prepared statement to each bank, saying, 'We cannot stop you from continuing to push forward and initiate, but we feel uneasy about you doing so.' And that's how it all ended

In January 2022, Diem Association sold its intellectual property and assets related to the payment network to the now defunct crypto friendly bank Silvergate, which abandoned the project a year later and recorded its related investments as losses. Politico reported at the time that Facebook's business model (which means the company will also control a significant portion of the financial system) has raised concerns among regulators.

The regulatory agency led by the US President's Financial Markets Task Force stated in its stablecoin regulatory report released in November 2021 that "the combination of stablecoin issuers or wallet providers with commercial companies may lead to excessive concentration of economic power

Many members of the former Diem team later joined Aptos and Sui, two Layer 1 memory blockchains built using the programming language Move originally developed by Facebook for its stablecoin project. David Marcus is leading his own cryptocurrency startup, Lightspark, with the goal of expanding the functionality of the Bitcoin Lightning Network.

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