Gemini co-founder Cameron Winklevoss revealed that US Secretary Janet Yellen’s decision to close Facebook Libra was a political witch hunt.
David Marcus, the former head of Facebook’s now-defunct Libra stablecoin project, later renamed Diem, disclosed how the Biden administration halted its progress despite meeting all regulatory requirements.
In his post titled “How Libra Was Killed,” Marcus details the political maneuvering that led to the project’s demise, emphasizing the role of U.S. Treasury Secretary Janet Yellen in influencing Federal Reserve Chair Jerome Powell to block its approval.
Libra Was Politically Killed, Says Marcus
Marcus revealed that Libra aimed to create a transformative blockchain-powered stablecoin to improve global payments and tackle financial crime, money laundering, and consumer protection issues. Announced in June 2019 with 28 initial partners, the project faced immediate and intense scrutiny.
Shortly after the launch, Marcus was summoned to testify before the Senate Banking Committee and the House Financial Services Committee. In response, his team made substantial revisions to the project over two years, only to abandon it due to continued resistance.
By 2021, Marcus claims that Libra met all regulatory conditions for a limited launch and even received backing from some Federal Reserve governors.
However, according to Marcus, Yellen instructed Powell that approving Libra would amount to “political suicide.” Following this, Powell reportedly ordered regulated banks to cease supporting the initiative, effectively killing the project. Marcus wrote:
“There was no legal or regulatory angle left for the government or regulators to kill the project. It was 100% a political kill—one that was executed through intimidation of captive banking institutions. That was the hardest part of this story for me personally. Not that we had failed, but that America, this country I immigrated to and became a proud citizen of because of its rule of law and value system, behaved in such a way for political reasons. It was a very tough pill to swallow.”
Crypto Leaders Echo Marcus’s Allegations
Prominent figures in the crypto industry have supported Marcus’s claims, accusing the Federal Reserve of targeting crypto projects under “Operation Choke Point 2.0,” which allegedly pressured banks to sever ties with crypto firms.
Cameron Winklevoss, co-founder of Gemini exchange, responded to Marcus’s post, stating:
“Can confirm. Gemini worked closely with David and his team at Meta to help launch Libra (fka Diem). We were on the one-yard line when Federal regulators murdered this project. It was all politics, no basis in law.”
Custodia Bank CEO Caitlin Long also affirmed Marcus’s account, saying:
“David Marcus, that sounds familiar! Someday, like you just did, I’ll be able to tell the real story of what the Fed did to Custodia Bank, and how the Fed lied to achieve Biden/Warren political aims. There is so much corruption & I’m glad it’s pouring out in public now.”
XRP lawyer John Deaton has called for an investigation into “Operation Choke Point 2.0.” He urged the next administration to appoint an independent counsel to lead the inquiry, suggesting Nic Carter as a candidate.
Brian Armstrong Suggests a Strategy
Coinbase CEO Brian Armstrong echoed concerns about government interference. He noted how figures like Janet Yellen pressured banks to avoid involvement with crypto projects, including Libra.
Armstrong highlighted the importance of launching technologies without seeking pre-approval from regulators, citing Bitcoin as a prime example of permissionless innovation.
“Once these tools are out in the wild, they can’t be rolled back,” Armstrong argued, adding that decentralization protects against regulatory overreach. He reiterated, “code is speech,” emphasizing its protection under the First Amendment.
The Libra project’s downfall may lead other crypto firms to disclose similar experiences under Operation Choke Point 2.0.
With Donald Trump considering appointing a ‘crypto czar’ at the White House, there could be a shift in regulatory attitudes toward the industry. Whether Facebook’s Diem stablecoin could see a revival remains to be seen.