The Diem Stablecoin Project has distanced itself from its Facebook in response to Democratic senators calling for the company’s Novi crypto wallet to be discontinued immediately.
Diem also claimed senior executives described it as “the best-designed stablecoin project the US government has ever seen.”
In an October 19 letter to Facebook CEO Mark Zuckerberg, senators, including crypto critic Elizabeth Warren, expressed “the strongest opposition to Facebook’s attempt to revive the goal of revitalizing cryptocurrency and digital wallets.”
Earlier that day, the Novi wallet was launched in partnership with Coinbase with a pilot project in the United States and Guatemala that would allow users to buy, send and receive Pax Dollars (USDP) through their Novi accounts.
Diem‘s response to the letter states that the senators misunderstood “the relationship between Mr. Diem and Facebook” and also avoided the Novi wallet test:
“Diem is not Facebook. We’re an independent organization, and FB’s Novi is just one of more than two dozen members of the Diem Society. Novis Pilot with Paxos is not related to Mr. Diem.
While this argument is technically correct, it may not be enough to allay US Senators’ concerns.
Diem was formerly known as Libra and has close ties to the social media giant, as the stablecoin project was originally proposed by Facebook in 2017 and Facebook CFO David Marcus is also co-founder of Diem.
In their letter, the senators claimed that Facebook was “untrustworthy” because the company took several steps that ultimately “harm users and society at large.” There was also no “satisfactory explanation of how Mr Diem would prevent illicit financial flows and other criminal activity”.
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Diem defended themselves by claiming they had “the strictest controls in the business”.
“In addition to compliance with financial crime, we were intensively involved in designing the project with a cross-agency management team. As part of this review, we made adjustments to reflect the feedback received and we were informed by management that Diem is a well-designed stablecoin project. The best the US government has seen, “Diem said.
Diem concluded by saying that when the stablecoin project finally starts it will do so with “confidence that Dasm’s payment system will be secure, protect consumers and ward off major financial crimes.”