The US treasury has already issued warning over Facebook Libra
Libra, a cryptocurrency under construction by a Facebook subsidiary called Calibra, was announced in May to a blast of bipartisan incredulity by lawmakers and the Trump administration. Critics asked how the company could ensure that Libra, which is designed to be anonymous, could be prevented from being used by money launderers, traffickers or terrorists.
But Tuesday’s hearing before the Senate Banking Committee was as much about Libra as it was a bipartisan prosecution of Facebook as a whole.
David Marcus, the head of Calibra, constantly sought to reassure senators that Facebook would not launch Libra Wallet, its payment system, until regulators are satisfied with its compliance to federal regulations. But he was repeatedly met with disbelief, disapproval and, at times, outright sarcasm.
The company had showed “through scandal after scandal that it doesn’t deserve our trust”, said senator Sherrod Brown.
Facebook was told to clean up its house before launching a new business model.
Mr Brown, a Democrat, told the hearing: “We’d be crazy to give them a chance to let them experiment with people’s bank accounts.” He thought it was “delusional” to think individuals would trust the social media company with their “hard-earned” money.
Other senators shared his concerns. “I don’t trust you guys,” said Republican senator Martha McSally. “Instead of cleaning up your house you are launching into a new business model.”
“Facebook has demonstrated, through scandal after scandal, that it does not deserve our trust, and that it should be treated like the profit-seeking corporation it is, just like any other company,” said Ohio Democratic Sen.
“It takes a breathtaking amount of arrogance to look at that track record and think, you know what we really ought to do next?” Brown continued. “Let’s run our own bank and our own for-profit version of the Federal Reserve for the world.”
When Marcus told Brown that the company chose to base its cryptocurrency firm in Switzerland because the neutral country is an international finance hub, and not to “evade” U.S. laws and regulations, Brown said Marcus was “delusional.”
But Marcus insisted that “trust is primordial” at Calibra and the Libra Association, the 100-member nonprofit that will oversee the banking operations. Because Facebook is only one of the 100, Marcus said, users would not have to trust Facebook to trust Libra.
“We’ve made mistakes in the past,” he said. “We’ve been working hard to get better.”
The hearing came days after news broke that the Federal Trade Commission recently voted to slap Facebook with a $5 billion fine because of the 2018 Cambridge Analytica scandal, in which information on 87 million Facebook users was accessed by a third party. The penalty would be the largest-ever levied against a technology company by the FTC.