The Facebook-led Diem cryptocurrency project has sold its assets to a small US bank for $182m in cash and shares, marking a humiliating end to the social media company’s once-sprawling digital payments ambitions.
The Diem Association, which was launched by Facebook in 2019 and is also supported by 25 other businesses and non-profits, announced on Monday it had sold its intellectual property and technology to California-based Silvergate Capital Corporation.
Silvergate said it paid $50mn in cash and issued 1.2m shares to Diem under the terms of the deal, which valued the stablecoin project at $182m.
Stuart Levey, Diem’s chief executive, said in a statement Diem had sought to address concerns over potential misuse of its system by illicit actors and received “positive substantive feedback” on the design of its proposed network.
However, it became clear, following dialogue with federal regulators, “that the project could not move ahead”, Levey said, and that the “best path forward” was to sell the Diem Group’s assets.
Formerly known as Libra, Diem initially sought to create a digital coin backed by a basket of real-world currencies, but quickly lost a wave of members after it began to attract scrutiny from US regulators over monetary stability and money laundering concerns.
Silvergate said it intended to launch a stablecoin by the end of 2022 using the Diem assets and its own technology and expects to incur about $30m of additional costs this year related to the integration of those technologies.
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