A member of the European Central Bank's executive board sounded the alarm on the "treacherous, cartel-like" Facebook Libra cryptocurrency. Yves Mersch issued a damning warning to not be fooled by Facebook's hollow promises of a decentralized ecosystem. Despite its noisy protestations, Mersh warns that the…
A member of the European Central Bank’s executive board sounded the alarm on the “treacherous, cartel-like” Facebook Libra cryptocurrency.
Yves Mersch issued a damning warning to not be fooled by Facebook’s hollow promises of a decentralized ecosystem.
Despite its noisy protestations, Mersh warns that the Facebook Libra network will be highly centralized. That’s the opposite of what cryptocurrencies like bitcoin brag they are about.
Mersch delivered the blistering takedown Sept. 2 at a legal conference of the European System of Central Banks in Frankfurt, Germany.
Mersch says contrary to its flowery rhetoric about democratizing financial services, Libra will be centralized around social media monopoly Facebook and its corporate mega-partners.
If Libra is the wheel, then Facebook chairman Mark Zuckerberg is the hub, and Libra’s partners are the spokes.
“Libra will actually be highly centralized, with Facebook and its partners acting as quasi-sovereign issuers of currency,” Mersch warned.
Mersch says this is because the Libra Association will control the Libra blockchain, and all decisions will be centralized.
“The Libra Association Council will take decisions on the Libra network’s governance and on the Libra Reserve, which will consist of a basket of bank deposits and short-term government securities backing Libra coins.
Libra-based payment services will be managed by a fully owned subsidiary of Facebook, called Calibra.
Finally, Libra coins will be exclusively distributed through a network of authorised resellers, centralising control over public access to Libra.”
Mersch admonished his colleagues at the ECB to be vigilant before Facebook releases Libra in the first half of 2020.
After that, Libra will be out, just like the infestations from the mythical Pandora’s Box that plagued the world.
As CCN reported, Binance CFO Wei Zhou echoed similar worries about Facebook’s Libra.
In April 2019, Zhou warned that the Libra network would operate like an unregulated nation-state. What’s more, Zhou says all “key decisions are made by one person.” And that’s Mark Zuckerberg.
The ECB’s Yves Mersch also expressed concern that “the high degree of centralization that is Libra’s hallmark” is harmful to the public. Why? Because “unaccountable private entities with a questionable track record in matters of trust” should not be entrusted with people’s confidential financial data.
He pointed out that the public already lost confidence in the social media monopoly because of its epic data-breach scandals.
Mersch concluded his speech by saying he hopes Europeans will remain vigilant before letting in a Trojan horse like Facebook Libra.
“I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favor of the beguiling but treacherous promises of Facebook’s siren call.”
Facebook was accused of violating user privacy by selling their personal data to third parties without their consent — for years.
In so doing, Facebook violated a 2011 consent decree under which it agreed to get user permission before sharing their personal data.
In response, a number of celebrities deleted their Facebook accounts. In March 2018, billionaire Elon Musk deleted the accounts of his companies, Tesla and SpaceX.
At the time, Musk said Facebook always gave him the creeps. “Just don’t like Facebook,” Musk tweeted. “Gives me the willies.”
Attorney Mark Grabowski is a professor at Adelphi University who specializes in internet law and monitors bitcoin. Professor Grabowski told CCN that he agrees with the ECB’s concerns.
“How could Libra not be centralized?” Grabowski told CCN. “Facebook is not backing this project because they are benevolent believers in decentralization. In fact, true decentralization threatens their network.”
Grabowski says Facebook is launching Libra to make money. Period.
“Look at the way Libra is structured,” Mark Grabowski told CCN. “It’s a complete contradiction to decentralization. Facebook can use all the crypto buzzwords they want, but it’s like putting lipstick on a pig.”
Last modified: May 20, 2020 1:04 PM UTC