Banks J.P. Morgan Chase and Goldman Sachs declined Facebook’s invitation to join Libra because of worries that cryptocurrency could be used to violate money laundering and sanctions laws, AnnaMaria Andriotis, Peter Rudegair, and Liz Hoffman at The Wall Street Journal reported.
Facebook hoped to launch Libra by June 2020 with over two dozen cofounders and members of the Libra Association, but these plans have been unraveling since the project was announced early this summer.
Facebook did not immediately respond to Business Insider’s request for comment regarding J.P. Morgan and Goldman Sachs’ involvement.
Lawmakers have had concerns about Facebook moving into the cryptocurrency world, especially after privacy snafus like the Cambridge Analytica scandal. In July, Facebook cryptocurrency chief and former Paypal president David Marcus was questioned about the project by the Senate Committee on Banking, Housing, and Urban Affairs. He promised that the company wouldn’t launch Libra until regulators’ concerns were addressed.
In July, Rep. Maxine Waters and other lawmakers sent a letter to Facebook calling on the company to stop Libra implementation over “serious concerns” about the project. Increased regulatory scrutiny spooked many of the project’s backers, and more than a quarter of initial partners have backed out, including PayPal, Mastercard, Visa, and eBay.
These criticisms also come amid worries that Facebook and other big tech companies are monopolies without sufficient competition. Democratic presidential candidate Sen. Elizabeth Warren has made breaking up large tech companies a cornerstone of her platform.
Facebook CEO Mark Zuckerberg is slated to testify before Congress — which will include critics like Waters — about Libra on October 23.