Libra is FB’s for-profit digital currency project. It’s being run by a new non-profit organization headquartered in Geneva, Switzerland — the Libra Association.
Here’s Libra’s endgame:
Yesterday, FB chief Mark Zuckerberg testified before the US House of Representatives Financial Services Committee about Libra and related things.
A big recurring question was the exact relationship between Facebook (the for-profit company) and Libra Association (the Swiss non-profit). FB is headed by Zuckerberg. The Libra Association is headed by David Marcus (who previously ran WhatsApp and PayPal, among other executive roles).
Related questions included the status of Calibra, Facebook’s fully-owned subsidiary, that will be supposedly handling FB’s side of the Libra integration. Calibra is currently developing the mobile ‘wallet’ app that will handle integration between FB, Libra, and other Libra Cartel members.
If you’re curious how all of this works legally, we’ve got your back:
There were a couple of moments that stood out in yesterday’s hearing that only law nerds probably registered. So wanted to share a few:
- unprompted, Zuckerberg mentioned in one of his responses that the Libra Association obtained legal form only a “few weeks ago” (paraphrasing);
- while noting that he does not control Libra, Zuckerberg made clear that Libra Association would remain in Switzerland;
- in response to questions about inconsistencies between testimony of David Marcus and his own, Zuckerberg stated that Zuckerberg’s word supersedes David Marcus’ when it comes to Libra;
- at least one Representative stated directly that they believe Libra is (controlled by) Zuckerberg:
- there were multiple suggestions to “break up FB” and/or subject it to antitrust scrutiny (and/or special legislation that would prevent BigTech from entering financial services markets) because of fears that FB acts like a monopoly, and that Libra gives FB even more monopoly power:
- FB/Calibra/Libra will inevitably face conflicting legal obligations (FB is required to do X in Jurisdiction A, and Libra is required to do not-X in Jurisdiction B), which means that Zuckerberg’s claims of ‘full compliance’ are incredible.
With the exception of sporadic grilling on FB’s abominable record on racial discrimination, Zuckerberg was in full command of the hearing. There was not a single “gotcha” moment or anything radically new that came out from the 6 hour affair.
Even experienced crypto native analysts had to concede that the most interesting parts of the hearing were the things left unsaid — the subtext, nuance, and subtlety by which Zuckerberg tried to ingratiate himself and FB to Congress, global governance networks, and the public watching at home or at work.
The committee missed a great opportunity to have a gotcha moment, however. All they had to do was keep asking Zuckerberg one simple governance question, in different ways:
-Who is Libra’s owner?
-Who owns Libra today?
-Who owns/controls the Libra Association?
-Who should own/control the Libra Association? How?
First, please note that, by its terms, the potential contract isn’t limited to your use of the Libra.org website. It also extends to any other website or online service that links to these terms, such as … Facebook.com, the upcoming Calibra wallet, … ?
And here’s the key part about the Libra Association’s “owner.”
Don’t know about you, but we would’ve loved to hear Zuckerberg pressed on who “our owner” is.
- First, “who’s Libra’s owner” is a question that MZ would not have been prepared for (because it directly contradicts what ended up being his testimony, which is that Libra Association is an independent loose entity of participants).
- Second, if Zuckerberg would have tried to dismiss the “owner” as a typographical mistake (eg, “this is just boilerplate that our lawyers recycled from another website…”) it would have highlighted serious operational deficits in Facebook’s internal legal review processes — which are directly relevant to FB/Libra’s ability to pull off Libra scaling across all of the world’s jurisdictions.
FWIW — we submitted this line of questions to Rep. Alexandria Ocasio-Cortez in response to her open CFP on Twitter (along with a few other ?s).
But it didn’t get picked up. That’s a shame, because Libra ownership is a highly material question that goes to the heart of the Law of Libra. (And, at minimum, we might have gotten a rare opportunity to witness the spectacle of Zuckerberg ripping apart the Facebook lawyers who let him down.)
And everyone knows that what happens in Switzerland largely stays in Switzerland. By design, gäll?