David Marcus, the former leader of Facebook’s Libra cryptocurrency project, has revealed the factors behind the initiative’s downfall.
According to Marcus, political pressures and the debanking of supportive institutions were instrumental in halting the project despite its robust design and significant regulatory consultations.
How Facebook’s Libra Was ‘Politically Killed’
In a post on X (formerly Twitter) dated November 30, Marcus detailed the chain of events that led to Libra’s demise. The blockchain-based payment system, which was later rebranded as Diem, aimed to revolutionize global payments by pairing a high-performance blockchain with a stablecoin.
However, Marcus stated that its failure had little to do with legal or regulatory issues. Instead, political forces played a decisive role.
“One essential point is worth making here. There was no legal or regulatory angle left for the government or regulators to kill the project. It was 100% a political kill in — one that was executed through intimidation of captive banking institutions,” he stated.
Marcus revealed that Libra faced immediate resistance after its 2019 announcement. Although the team made adjustments to address concerns and delayed the project’s launch to 2021, political opposition remained unrelenting. He highlighted a turning point when Federal Reserve Chair Jerome Powell reportedly shifted his stance after meeting with Treasury Secretary Janet Yellen.
Marcus disclosed that Yellen called supporting Libra “political suicide,” prompting the Federal Reserve to issue warnings to banks involved with the project. During these calls, the Fed’s general counsel reportedly warned banks against advancing Libra, citing discomfort with the project.
“The Fed organized calls with all the participating banks, and the Fed’s general counsel read a prepared statement to each of them, saying: ‘We can’t stop you from moving forward and launching, but we are not comfortable with you doing so.’ And just like that, it was over,” Marcus stated.
Crypto industry figures have since supported Marcus’s account. Kathryn Haun, a former Libra board member, and Tyler Winklevoss, co-founder of Gemini, both highlighted how political motives derailed Libra.
“Gemini worked closely with David and his team at Meta to help launch Libra (fka Diem). We were on the one-yard line when Federal regulators murdered this project. It was all politics, no basis in law,” Winklevoss stated.
Reflecting on this experience, Marcus emphasized the need for decentralization in building future financial systems. He championed Bitcoin as the ideal foundation for such networks, citing its neutrality and tamper-proof design.
“If you’re trying to build an open monetary network for the world—ultimately moving trillions of dollars a day and designed to last for 100 years—you must build it on the most neutral, decentralized, and tamper-proof network and asset, which is undoubtedly Bitcoin,” he concluded.
Marcus’s revelations add to growing scrutiny over “debanking” within the cryptocurrency and tech sectors. Recent allegations of politically motivated financial restrictions have sparked further conversations about the intersection of regulation, politics, and innovation in the United States.
