Facebook Libra Was Killed Politically By Pressure from US Secretary Janet Yellen
David Marcus, former chief of now-defunct Facebook Libra stablecoin project, has openly revealed how the Biden administration killed the project despite passing all regulatory checks. In his detailed post “How Libra Was Killed“, Marcus provides a complete overview of the political slugfest. He also details how US Treasury Secretary Janet Yellen prevented Fed Chair Jerome Powell from giving it the go-ahead.
Facebook Libra Was Killed Politically, Says David Marcus
David Marcus, who led Facebook’s Libra project, later renamed Diem, shared how the political forces choked the project into non-existence despite creating regulatory hurdles. Libra, designed as a high-performance blockchain paired with a stablecoin, aimed to revolutionize global payments.
Marcus said that he and his team at Meta envisioned a system capable of addressing financial crime, money laundering, consumer protection, reserve management, and more. The project, announced in June 2019 with 28 partners, faced intense regulatory scrutiny from the outset.
Just two following the launch of Libra, the Senate Banking Committee and the House Financial Services Committee called Marcus to testify. This led to his team conducting some exhaustive revisions for nearly two to address lawmakers’ concerns, before finally giving up on the project.
Marcus said that by 2021, the Facebook Libra project met every regulatory requirement needed for a limited launch, and even supported by some Federal Reserve governors. However, he adds that US Treasury Secretary Janet Yellen instructed the Fed Chair that allowing Libra would be a “political suicide”. Soon thereafter, Powell instructed all regulated banks to stop supporting the project, ultimately leading to its demise. David Marcus wrote:
“There was no legal or regulatory angle left for the government or regulators to kill the project. It was 100% a political kill—one that was executed through intimidation of captive banking institutions. That was the hardest part of this story for me personally. Not that we had failed, but that America, this country I immigrated to and became a proud citizen of because of its rule of law and value system, behaved in such a way for political reasons. It was a very tough pill to swallow”.
Crypto Industry Leaders Back David Marcus’s Claims
Crypto industry leaders including Coinbase CEO Brian Armstrong, Gemini exchange co-founder Cameron Winklevoss, and Custodia Bank CEO Caitlin Long have all come out in support of David Marcus stressing that the Fed’s behavior was part of Operation Choke Point 2.0, which involved forcing regulated banks to cut ties with crypto firms. Responding to Marcus’s post on X platform, Cameron Winklevoss wrote:
“Can confirm. 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”.
Caitlin Long, the CEO of Custodia Bank also affirmed stating: “David Marcus, that sounds familiar! Someday, like you just did, I’ll be able to tell the real story of what the Fed did to Custodia Bank, and how the Fed lied to achieve Biden/Warren political aims. There is so much corruption & I’m glad it’s pouring out in public now”.
XRP Lawyer John Deaton recently demanded a detailed investigation into Operation Choke Point 2.0. He proposed that the incoming administration appoint an independent counsel to lead the investigation, recommending Nic Carter as a strong candidate for the investigative team
Coinbase CEO Brian Armstrong Shares A Tip
Coinbase CEO Brian Armstrong also said that the government, including Secretary Janet Yellen, pressured the banks from working with crypto firms and on the Facebook Libra project. Armstrong pointed to past events, including the launch of Meta’s Llama project, to emphasize the importance of releasing new technologies without seeking approval from regulators.
Drawing parallels to the development of Bitcoin, Armstrong argued that decentralized technologies should be available as open-source software to avoid regulatory pushback. “Once these tools are out in the wild, they can’t be rolled back,” he stated.
The Coinbase CEO asserted that this approach is critical for fostering innovation, with the Bitcoin network serving as a prime example of a successful, permissionless project. Armstrong also reiterated his belief that “code is speech,” highlighting the protection of software development under the First Amendment.
Makes sense – the government pressured the banks (again).
I think the lesson from Libra is that these tools should be released as open source software, and to not ask for permission. Once they are out in the wild they can’t be rolled back. This is why Bitcoin worked, and it’s… https://t.co/2Embd9jlNj
— Brian Armstrong (@brian_armstrong) November 30, 2024
The Facebook Libra project is likely to open the door to disclosure from other crypto firms that suffered due to Operation Choke Point 2.0. With Donald Trump planning to have a ‘crypto czar‘ position at the White House, things could change for the betterment of the crypto industry. It will be interesting to see whether the Diem stablecoin project from Facebook will revive again.
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