Diem Is Shutting Down after Silvergate Acquires Project’s Intellectual Property and Other Technology

Source : coinspeaker.com

Under the asset purchase agreement, Silvergate paid $50 million in cash to Diem and also issued 1,221,217 of its class A shares.

After much effort from Meta, Diem Association is now shutting down after Silvergate Bank (NYSE: SI) purchased the stablecoin project. On the 31st of January, Silvergate announced that it is buying all technologies related to the Diem Association, while the Association said it would start winding down its operations. Meta Platforms announced the stablecoin project in June 2019 as Libra before it was rebranded to Diem Association in December 2020. At the time, Meta was also known as Facebook (NASDAQ FB).

Silvergate Acquires the Diem Project’s Assets

In a press release, Silvergate announced that it had acquired all the intellectual property and technology assets that belong to the Diem Group. The bank said it will leverage this technology to “further solidify its position as a leader in the digital currency industry.” Some of the assets Silvergate acquired from Diem are development and deployment and operations infrastructure. Also, the company is now the new owner of Diem’s tools that can be used for a blockchain-based payment network. The payment network is designed for cross-border remittances and facilitates payments for commerce. Also, Silvergate has become familiar with the network with the help of its partnership with Diem. Part of the acquisitions includes proprietary software elements significant in running a regulatory-compliant stablecoin network.

Silvergate CEO Alan Lane said that the company identified the need for a US dollar-backed stablecoin. However, he specifically mentioned a stablecoin that is well regulated and highly scalable to help them move money without challenges. The CEO emphasized the intention to fulfill Silvergate’s customers’ needs, as it said during its Q4 2021 earnings call. Therefore, Silvergate will be launching a stablecoin in 2022, backed by the new assets from the Diem Association. The bank will utilize the new assets in addition to its existing technology. The CEO further expressed his appreciation to Diem and the engineers and developers who worked on the technology.

Additionally, the CEO of Diem, Stuart Levey, commented:

“I’m tremendously proud of the efforts of our members, partners and teams who have worked tirelessly to develop the Diem Payment Network with robust controls to protect consumers and combat financial crime. We have confidence in Silvergate’s ability to take Diem’s technology forward and transform the future of payments.”

Details of Silvergate’s Purchase of Diem’s Assets

Under the asset purchase agreement, Silvergate paid $50 million in cash to Diem and also issued 1,221,217 of its class A shares. Using Silvergate’s closing price of $107.74 on the 31st of January, the aggregate value is nearly $182 million. Goldman Sachs & Co. was the financial advisor to Silvergate, while Holland & Knight was the legal advisor. On the other hand, O’Melveny & Myers LLP, Skadden, Slate, Arps, Fenwick & West LLP, and Meagher & Flom LLP serves as Diem’s legal advisor. Also, the Association had Architect Partners LLC as its financial advisor.

Currently, at pre-market trading, SI stock is up 10.31% to $107.74. Except for adding 5.58% in the last five days, Silvegate has been declining for the past year.

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Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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