Diem Association, the organization behind Meta’s stablecoin project, has announced that Diem Group has been acquired by Silvergate Capital Corporation.
In a recent statement, Diem Network’s CEO Stuart Levey confirmed the sale organization’s “intellectual property and other assets related to the running of the Diem Payment Network to Silvergate Capital Corporation.”
1/7 From the statement by the CEO Stuart Levey on the sale of the Diem group's assets to Silvergate — “From the outset, the Diem project has been focused on leveraging the benefits of blockchain technology to design a better and more inclusive payment system. pic.twitter.com/fX9ptwDt0k
— Diem Association (@DiemAssociation) January 31, 2022
According to a separate announcement by Silvergate, a San Diego-based crypto bank:
“The assets acquired by Silvergate include development, deployment and operations infrastructure and tools for running a blockchain-based payment network designed to facilitate payments for commerce and cross-border remittances.”
We are pleased to announce that we have purchased blockchain payment network assets from @DiemAssociation! The acquisition is an investment in our platform and enhances our existing stablecoin infrastructure initiative. Read more here: https://t.co/CibuhijDrr
— Silvergate Bank (@silvergatebank) January 31, 2022
“Included in the acquisition are proprietary software elements critical to running a regulatory-compliant stablecoin network,” reads Silvergate’s announcement.
Details of the agreement
Under the acquisition agreement, Silvergate has issued 1,221,217 shares of Class A common stock to Diem and paid $50 million in cash. Based on the closing price of Silvergate Bank (NYSE: SI) on January 31, 2022, the aggregate value of the consideration was $182 million. Silvergate will also additionally pay approximately $30 million as integrating the acquired assets into Silvergate’s existing technology.
The news about Diem’s acquisition by Silvergate was already circulation on the media. Now the sale is confirmed, it marks the end of a more than two-year effort to launch the stablecoin envisioned by Mark Zuckerberg.
Diem started as Libra in 2019 to launch a global stablecoin but faced a long backlash from regulators and legislators around the world who were hesitant about a stablecoin with ties to Facebook. Congressional hearings were also held featuring Diem co-creator David Marcus and Mark Zuckerberg to testify on the project. In October 2021, a letter to CEO Mark Zuckerberg also called to shutdown Diem and Novi, a crypto wallet intended to hold Diem.
However, all the efforts to convince regulators were in vain. In a Diem statement, Diem CEO Stuart Levey blamed regulators for the demise of Diem. According to him, Diem is the best-designed project to eliminate users’ and regulators’ concerns and that was also confirmed by a senior regulator. Furthermore, the President’s Working Group on Financial Markets also validated many of Diem’s core design features. He said:
“In the United States, a senior regulator informed us that Diem was the best-designed stablecoin project the US Government had seen.”
Despite all these positive remarks, the project never got a green signal. Levey stated:
“Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead. As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate.”
It’s unclear what this acquisition means for Diem’s cryptocurrency wallet Novi.