Facebook Seems to Be Getting More Serious About Blockchain, Crypto, and Payments

A Reuters report published on Friday (May 17) seems to suggest that Facebook's blockchain-powered payments initiative (codenamed "Project Libra") has taken another step forward toward getting launched.

Project Libra's Origin Story

The first time we got a hint of Facebook's interest in cryptocurrency was on 4 January 2018 when CEO Mark Zuckerberg said in a post on his Facebook page that one of his personal missions for 2018 was to learn more about this subject. 

And then in May 2018 the world first found out that Facebook was getting serious about blockchain technology.

On 8 May 2018, in a post on Facebook, David Marcus, the former head of Messenger, who was at that time also a board member (since December 2017) of crypto exchange Coinbase, revealed that he was leaving that role to set up a new group focused on exploring applications of blockchain technology across the whole of Facebook.

On 13 December 2018, Cheddar reported that Facebook’s blockchain group is planning to "potentially disrupt the entire payments industry":

"At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users."

Several days later, Bloomberg reported that Facebook was creating its own cryptocurrency (a stablecoin) for money transfers within its highly popular messaging app WhatsApp.

Roughly, two months later (28 February 2019), the New York Times confirmed Bloomberg's earlier story, and said that, according to its sources, this project was "far enough along that the social networking giant has held conversations with cryptocurrency exchanges about selling the Facebook coin to consumers."

Then, around one month ago, Nathaniel Popper, one of the two journalists who wrote the report in the New York Times, provided this update (on Twitter) about Facebook's cryptocurrency project:

And finally, one week ago, the Wall Street Journal reported that Facebook was "recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system," and that the core part of this initiative (code-named "Project Libra") is "a digital coin that its users could send to each other and use to make purchases both on Facebook and across the internet."

Furthermore, this report said that, according to people familiar, Facebook was talking to "financial institutions including Visa Inc., Mastercard Inc. and payment processor First Data Corp." about investing in this project.

The U.S. Senate's Concerns About Project Libra

On May 9, the United States Senate's Committee on Banking, Housing, and Urban Affairs, wrote an open letter, signed by Chairman Mike Crapo and Ranking Member Sherrod Brown, to Mark Zuckerberg, the Founder, Chairman, and CEO of Facebook.

Here is how the letter referred to Project Libra and explained why the committee was concerned:

"The Wall Street Journal recently reported that Facebook is recruiting dozens of financial firms and online merchants to help launch a cryptocurrency-based payments system using its social network. Last year, Facebook asked U.S. banks to share detailed financial information about consumers. In addition, privacy experts have raised questions about Facebook’s extensive data collection practices and whether any of the data collected by Facebook is being used for purposes that do or should subject Facebook to the Fair Credit Reporting Act."

Swiss FinTech Firm Libra Networks

According to Reuters, FinTech company Libra Network was registered in the Republic and Canton of Geneva on May 2. 

Looking at the entry for Libra Networks, which was published on May 7 in the Swiss Official Gazettte of Commerce (SOGC), tells us:

  • Libra Networks LLC (registration number: CHE193533388) has its registered office in Geneva.
  • According to the English translation, the stated purpose of this company is "provision of services in the fields of finance and technology, as well as the development and production of related software and infrastructure, particularly in connection with investment activities, the payment operation, the financing, identity management, data analysis, big data, blockchain and other technologies."
  • The share capital is CHF 20,000 (100 shares, each with a nominal value of CHF 200); all of the shares are owned by Facebook Global Holdings II, LLC.
  • The auditor is Ernst & Young.

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P2P Token Trading Platform AirSwap Discloses ‘Critical Vulnerability’

  • Peer-to-peer trading platform AirSwap claims to have identified a "critical vulnerability" in one of its smart contracts. 
  • Ten addresses have been identified so far as being at risk of exploitation. 

Peer-to-peer token trading network AirSwap has disclosed a “critical vulnerability” in a newly released smart contract. 

AirSwap's Critical Vulnerability

According to the disclosure, which was published on Sept. 13, AirSwap’s internal security team identified a potential exploit in a newly released mainnet smart contract. The vulnerability would allow an attacker to “perform a swap without requiring a signature from a counterparty.” 

AirSwap claims that the offending code was only present for twenty-four hours on the network before being identified and removed. However, users of AirSwap Instant between Sept. 11 and Sept. 12 may have been affected by the vulnerability, with the report claiming that 10 accounts have been recognized so far as being at risk. 

AirSwap has published the addresses to the vulnerable accounts, telling all other users that no further action is required. The report also outlines the step-by-step actions taken by the exchange in the aftermath of discovering the vulnerability, including an apology to its client base, 

We would like to deeply apologize to our affected users for any inconvenience these vulnerabilities may have caused, and hope that the important lessons we continue to learn throughout these processes form the basis for a more open, secure, and efficient trading environment.

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