The untold story of how politics stopped Facebook’s Libra project

David Marcus, who was the leader of Facebook's Libra cryptocurrency project, explained the reasons behind the project's failure.

According to Marcus, the project had a robust design and significant regulatory consultation, but political pressures and undermining of supporting institutions played a role.

How Facebook's Libra was ‘killed by politics'

In a Nov. 30 post on X (formerly Twitter), Marcus detailed the chain of events that led to Libra's death. The blockchain-based payment system, later renamed Diem, aims to transform global payments by combining high-performance blockchain with a single stable coin.

However, Marcus said the decline had nothing to do with legal or regulatory issues. Instead, political forces played a crucial role.

“One important point is worth making here. There was no legal or regulatory angle for the government or regulators to kill the project. It was 100% political assassination – executed by threatening the banking institutions with hostages,” he said.

Marcus noted that Libra faced immediate opposition after the 2019 announcement. Although the group made adjustments to address the issues and delayed the project's launch to 2021, political opposition has not subsided. Federal Reserve Chairman Jerome Powell highlighted the shift in his stance after meeting with Treasury Secretary Janet Yellen.

Marcus Yellen called backing Libra “political suicide,” prompting the Federal Reserve to issue a warning to banks involved in the project. During these calls, the Fed's general counsel warned banks against advancing Libra, citing unease with the project.

“The Fed organized calls with all participating banks, and the Fed's general counsel read a prepared statement to each of them: ‘We cannot prevent you from going ahead and launching, but we are not comfortable with you doing so. ‘ And just like that, it was over,” Marcus said.

Since then, crypto industry figures have backed Marcus' account. Former Libra board member Kathryn Haun and Gemini founder Tyler Winklevoss both highlighted how political motives have frustrated Libra.

“Gemini worked closely with David and his team at Meta to help launch Libra. We were on the one-yard line when federal regulators killed this project. It was all politics and no basis in law,” Winklevoss said.

Reflecting on this experience, Marcus emphasized the importance of 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 a financial network that's open to the world—eventually moving trillions of dollars a day and designed to last for 100 years—you need to build it on a highly independent, decentralized, and tamper-proof network and asset. It is undoubtedly Bitcoin,” he concluded.

Marcus' revelations add to the growing scrutiny of “debanking” in the cryptocurrency and technology sectors. Recent allegations of politically motivated financial restrictions have sparked further discussions about regulation, politics, and innovation in the United States.