Four months ago, when Facebook unveiled its ambitious cryptocurrency project, Libra, the scandal-ridden tech giant assured skeptics that Libra will only inherit the good side of Facebook—AKA its two billion global users—without being exposed to any Big Tech ethical risks, because the project will be supervised by an outside organization called the Libra Association, an independent group of 27 reputable companies in tech and finance, including Visa, PayPal, Uber and others.
Not long ago, the pitch was lauded as “a genius branding effort” even by Facebook’s most sharp-tongued critics. But, after several months of repeated pushback from regulators in the U.S. and the European Union, a growing number of Libra Association members are turning their backs on Facebook.
Last Friday, PayPal became the first dropout from the Libra Association, saying it would “forgo further participation” in the organization. Visa, Mastercard and Stripe are also reportedly reconsidering their involvement with the organization after receiving a warning letter from Washington, Bloomberg reported on Tuesday.
Two Democratic senators, Sherrod Brown of Ohio and Brian Schatz of Hawaii, wrote a letter to the three payment companies, stating: “Facebook is currently struggling to tackle massive issues, such as privacy violations, disinformation, election interference, discrimination and fraud, and it has not demonstrated an ability to bring those failures under control.”
“You should be concerned that any weaknesses in Facebook’s risk management systems will become weaknesses in your systems that you may not be able to effectively mitigate,” the senators wrote.
Facebook intends for Libra to be a border-free payment system for its two billion users worldwide. But regulators are concerned about its possible impact on traditional financial institutions and even the global economy.
On Wednesday, Facebook CEO Mark Zuckerberg was ordered to explain Libra in detail before members of the U.S. House Committee on Financial Services in Washington on October 23. “Mark looks forward to testifying before the House Financial Services Committee and responding to lawmakers’ questions,” a Facebook spokesperson said in a statement.
In August, Facebook’s Libra project lead David Marcus did a similar interview with Congress.
In a statement on Tuesday, the Libra Association said it “maintains its commitment to not launch until questions and concerns by regulators are addressed,” adding that 1,500 entities have expressed interest in joining the organization.