Facebook’s crypto project Diem sold after pushback

NEW YORK

The Facebook-backed digital currency project Diem has announced the winding down and $182-million sale of its technology, capping a years-long initiative that drew significant concern from regulators.

Facebook’s announcement in 2019 of plans to design a cryptocurrency and payment system raised immediate red flags for global finance officials, who expressed a barrage of criticism about the security and reliability of a private network.

Diem Networks’ U.S. CEO Stuart Levey said in a statement that the initiative made progress.

“But it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead,” he added.

The technology was bought by Silvergate Capital Corporation in California that is a go-to for crypto projects, and which put the sale price at $182 million.

Pressed by regulators’ concerns about a currency managed by a private company, the project was previously entrusted to an independent entity based in Geneva.

After the defection of several major partners such as PayPal, Visa and Mastercard, the organization scaled back its ambitions, before renaming itself Diem at the end of 2020.