Congressional lawmakers have called on Facebook to cease work on its proposed cryptocurrency, citing the social media giant's recent travails over privacy issues as a glaring threat to the functioning of the world economy.
“Because Facebook is already in the hands of over a quarter of the world’s population, it is imperative that Facebook and its partners immediately cease implementation plans until regulators and Congress have an opportunity to examine these issues and take action,” the lawmakers wrote. “During this moratorium, we intend to hold public hearings on the risks and benefits of cryptocurrency-based activities and explore legislative solutions. Failure to cease implementation before we can do so, risks a new Swiss-based financial system that is too big to fail.”
While Facebook has published a 'white paper' on these projects, the scant information provided about the intent, roles, potential use, and security of Libra and Calibra exposes the massive scale of the risks and the lack of clear regulatory protections, the letter contends.
Investors and consumers transacting in Libra may be exposed to serious privacy and national security concerns, cyber security risks, and trading risks, says the Committee.
"These risks are even more glaring in light of Facebook’s troubled past, where it did not always keep its users’ information safe," the letter continues. "For example, Cambridge Analytica, a political consulting firm hired by the 2016 Trump campaign, had access to more than 50 million Facebook users’ private data which it used to influence voting behavior. As a result, Facebook expects to pay fines up to $5 billion to the Federal Trade Commission (FTC), and remains under a consent order from FTC for deceiving consumers and failing to keep consumer data private. It has also recently been sued by both civil rights groups as well as the US Department of Housing and Urban Development for violating fair housing laws on its advertising platform and through its ad delivery algorithms."
The chair of the Committee, Maxine Waters has announced plans to convene a full Committee hearing entitled, 'Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System' on 17 July.