Elizabeth Warren Urges Zuckerberg to Halt Facebook's Crypto Wallet Novi

Elizabeth Warren Urges Zuckerberg to Halt Facebook's Crypto Wallet Novi

In brief

  • Senator Warren and five of her colleagues lashed out at Mark Zuckerberg for launching a wallet
  • The wallet launch did not include Diem, Facebook's long-delayed cryptocurrency
  • Hours after Facebook went live this morning with its digital wallet, Novi, Sen. Elizabeth Warren (D-MA) and four other Senators from her party sent a warning shot at the company’s CEO Mark Zuckerberg, demanding that he "immediately discontinue" the program.

    Novi went live this morning in the U.S. and Guatemala, allowing users there to trade Paxos Dollars (USDP), instantly and with no fees. Coinbase is backing Novi with its crypto custody services, and will hold all funds involved with the program.

    Notably, Novi does not incorporate Facebook’s own long-anticipated cryptocurrency, Diem. This not appear to have mollified the group of senators, who also include Brian Schatz (D-HA), Sherrod Brown (D-OH), Richard Blumenthal (D-CT) and Tina Smith (D-MN).

    “Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risks and keep consumers safe has proven wholly insufficient," they stated in the letter.

    Facebook's company’s journey to launch a wallet and stablecoin has been a fraught one: a series of blistering 2019 congressional hearings all-but-halted the project, then called Libra.

    But Facebook made clear this morning that today’s establishment of Novi is a key first step on the path to Diem’s roll-out: “We intend to migrate Novi to the Diem payment network once it receives regulatory approval”.

    Whether 2021 will provide a more favorable climate for Facebook’s crypto ambitions is another question. The 2019 Libra hearings came in the aftermath of Facebook’s disastrous Cambridge Analytica scandal; today’s blistering admonition is was likely informed by the bombshell testimony of Facebook whistleblower Frances Haugen before the Senate Commerce Committee just weeks ago.

    The senators also demanded that Facebook both abandon Novi immediately, and scrap any future plans to release Diem. “Time and again, Facebook has made conscious business decisions to continue with actions that have harmed its users and the broader society.”

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