The Ties That Bind Facebook's Libra


“Most of the association members have highly aligned interests, since the majority of them are for-profit companies with extensive ties with one another,” De Filippi says. “This creates an important concentration of power, which basically goes against the very idea underlying the use of a blockchain.”

For-profit organizations seeking to join the Libra Association must meet a series of criteria and invest $10 million. (The investment can be waived for nonprofits.) The investments will go into the Libra Reserve, which will fund the group’s operations, and earn interest. Association members will have a voice in its governance and any changes to the underlying code.

Facebook’s goal is to have 100 founding members, which it says will be “geographically distributed and diverse businesses, nonprofit and multilateral organizations, and academic institutions.” To date, however, only 27 organizations have signed letters of intent to join; in July, Visa CEO Brian Kelly said none of the organizations listed as Libra’s founding members had formally signed on to the project or committed the $10 million.

On Friday, one of the founding members, PayPal, said it was no longer interested, casting additional doubt on the project. Other financial institutions, including Visa, Mastercard, and Stripe, also are reported to be reconsidering their participation. The association is scheduled to have its first meeting, in Geneva, on October 14.

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The 27 remaining association members count many ties to each other, and to Facebook. Andreessen Horowitz, for example, is among the biggest Silicon Valley proponents of cryptocurrencies, and last year created a $350 million fund dedicated to crypto investments. The venture firm is an investor in four Libra Association members, in addition to Facebook: Stripe, Anchorage, Coinbase, and Lyft; at least one Andreessen Horowitz partner sits on the board of the latter three. Facebook’s Marcus was also on the Coinbase board before stepping down last year because of his role with Libra.

Marc Andreessen, the firm’s cofounder, is close to Zuckerberg and has been on Facebook’s board since 2008. In 2016, investors sued Facebook, claiming Andreessen had been advising Zuckerberg on a restructuring plan that would have given the CEO more control over the company. Facebook settled the suit by agreeing to shelve the proposed restructuring.

Andreessen is also on the board of Coin Center, a Washington, DC, organization that advocates “a regulatory climate that preserves the freedom to innovate using permissionless blockchain technologies.” Coin Center is not a Libra Association member, but its board of directors and advisory board include leaders of two association members: Fred Wilson of Union Square Ventures, and Wences Casares of Xapo, which offers secure cryptocurrency wallet services, including a physical vault in Switzerland.

Casares and his longtime business partner Meyer Malka are connected to multiple Libra members. The pair have started several businesses together, beginning with an online brokerage in Argentina in the 1990s. In August, Xapo sold its institutional custody business to Coinbase—another Libra member—for $55 million. Marcus, the Facebook executive, and Milner, the investor, also have invested in Xapo.

Casares is Xapo’s CEO, as well as a board member of PayPal, where Marcus was formerly president, and a former board member of Kiva, a nonprofit that arranges peer-to-peer loans for people in the developing world that is an association member. Malka is managing partner of Ribbit Capital, a venture capital firm that is a Libra Association member. Malka is also on the board of MercadoLibre, the company that runs Mercado Pago, a payment platform and member of Libra, and an investor through Ribbit in both Xapo and Coinbase. Xapo and Ribbit did not respond to multiple requests for comment.

Government Resistance

Libra is already facing resistance from lawmakers and regulators around the world, including President Trump and Federal Reserve Chair Jerome Powell. The concerns raised include antitrust and competition issues, money laundering and terrorism financing, consumer protection, and even the potential effect of Libra on democracy itself. Earlier this month, French Finance Minister Bruno Le Maire suggested that Libra could be blocked in Europe, citing concerns about national financial stability and loss of control over monetary policy.



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