Facebook Calibra Project Head David Marcus Testifies Before US Senate Banking Committee

By Amit Chowdhry ● Jul 16, 2019
  • Facebook’s head of Calibra David Marcus went on Capitol Hill to answer questions from lawmakers about how Libra will work

Today David Marcus — the head of Calibra at Facebook — answered a number of questions posed by members of Congress about the Libra cryptocurrency that the social network company is working on. Libra has been met with tremendous skepticism by the government and privacy advocates due to Facebook’s shaky track record. The Federal Trade Commission recently fined Facebook $5 billion due to the numerous privacy violations.

Facebook plans to introduce Libra next year, but the price of the cryptocurrency is not yet known. However, it is assumed that the cryptocurrency will be equivalent to $1.00 and is going to be backed by cash and government bonds managed by the Libra Association — which is a nonprofit comprised of mostly American corporations with headquarters in Switzerland.

Senator Brian Schatz (Hawaii Democrat) asked whether Facebook was the right company to create a global currency. Marcus responded that Facebook should do it because the company has the resources and talent. And Marcus added that if Facebook does not get involved, then other companies (possibly overseas) will.

Marcus said that the Libra Association is a collaboration of companies among equals, but the senators claimed that Facebook is not an equal partner. They have a point since Facebook’s user base of 2 billion people gives Facebook significant negotiation power within the Libra Association.

While Facebook is planning to lead the development of Libra, the social network company said it would cede control of the network and reserves to the Libra Association. Facebook and its wallet subsidiary Calibra are among the 28 founding members of the association. However, the charter has not been ratified yet.

Interestingly, Gemini crypto exchange co-founders Tyler Winklevoss and Cameron Winklevoss may join the Libra Association. The Winklevoss brothers are known for suing Facebook co-founder and CEO Mark Zuckerberg, which ended with a $65 million lawsuit settlement. With the some of those proceeds, the Winklevoss brothers bought 200,000 Bitcoins at a price of $7, according to Ben Mezrich via CNBC — the author who wrote: “The Accidental Billionaires” (the inspiration behind The Social Network film). Bitcoin is now hovering about $10,000 and it peaked at nearly $20,000 back in December 2017.

It is unknown which providers will have control over the Libra network. It could potentially have hundreds of wallet providers, merchants, and many validators. And it is unclear what happens if bad actors like launders and terrorists conduct transactions on the network.

Will Facebook support third party wallets? Marcus explained that wallets will be “interoperable,” meaning users with different wallets providers will be able to send money to one another.

Prior to the interviewing of Marcus, the committee released a copy of his testimony. “We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” wrote Marcus.

Prior to the interviewing of Marcus, the committee released a copy of his testimony. “We know we need to take the time to get this right. And I want to be clear: Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” wrote Marcus.