- The Diem Association has hit back at criticism aimed at it over Facebook’s Novi wallet pilot
- The group made it clear that the Novi pilot was “unrelated to Diem”
- Facebook announced the Novi pilot on Tuesday
The Diem Association, the group of companies behind Facebook’s troubled Diem cryptocurrency (formerly Libra), has sought to distance itself from the criticism aimed at Facebook over the launch of Facebook’s Novi cryptocurrency wallet pilot. U.S. lawmakers have questioned the wisdom of allowing Facebook, and by extension Diem, to operate a cryptocurrency given privacy concerns raised in recent months. The Diem Association stated in response that the criticism “misunderstands the relationship between Diem and Facebook”, with the association making it clear that Facebook is just one of a number of companies involved in the Diem cryptocurrency project and that the Novi pilot is “unrelated to Diem”.
Diem Association is “Independent Organization”
Facebook announced the launch of its Novi crypto wallet in association with Coinbase Custody and Paxos on Tuesday, and it didn’t take long for critics to question the wisdom of allowing Facebook, whose reputation has taken a hammering following data usage scandals and powerful recent whistleblower testimony, to be in charge of such sensitive personal data.
The Diem Association, which rebranded from the Libra Association last December, has hit back, making it abundantly clear that it is separate from both Facebook and the Novi project:
Diem is not Facebook. We are an independent organization, and Facebook’s Novi is just one of more than two dozen members of the Diem Association. Novi’s pilot with Paxos is unrelated to Diem.
FinCen Has “Provided Positive Feedback” on Criminal Potential
The statement also debated the assertion that “there has not been ‘a satisfactory explanation for how Diem will prevent illicit financial flows and other criminal activity’”:
To the contrary, the Treasury Department’s Financial Crimes Enforcement Network has provided positive feedback on Diem’s financial crime compliance framework, and we believe we have the most robust controls in the industry. Unique in the industry, that includes not allowing anonymous transactions with unhosted wallets, until the illicit finance risks they entail can be adequately addressed.
The Diem Association counts among its member organisations Facebook, Lyft, Spotify, Uber, Coinbase, and Anchorage. A number of initial Libra backers dropped out in 2019 after regulators and governments worldwide reacted negatively to the idea of a private currency.