'This doesn't sound right': Mastercard's CEO ditched Facebook's Libra after multiple red flags
- Mastercard's CEO withdrew from Facebook's Libra over concerns about compliance, making money, and wallets, he told the Financial Times.
- Ajay Banga dropped out because Libra's leaders wouldn't commit to observing laws, he couldn't see how the digital currency would make money, and he was shocked by Facebook's plan to store the coins in its Calibra digital wallets.
- "When you don't understand how money gets made, it gets made in ways you don't like," he said.
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Mastercard's CEO ditched Facebook's Libra because of his concerns about compliance, monetization, and the social-media titan's plan to insert itself into transactions, he recently told the Financial Times.
Ajay Banga signed up Mastercard to support Facebook's digital currency and network, but dropped out — along with Visa, eBay, PayPal, and other partners — last fall. One reason was Libra's leaders wouldn't commit to abiding by laws around knowing their clients, money laundering, and data management, he told the newspaper.
"Every time you talked to the main proponents of Libra, I said 'Would you put that in writing?' They wouldn't."
It was also unclear to Banga how Libra would generate revenue, stoking his fears that it would make money in unscrupulous ways. "When you don't understand how money gets made, it gets made in ways you don't like," he told the Financial Times.
Thirdly, Banga was concerned that Facebook was pitching Libra as a decentralized network powered by various partners, while planning for customers to store their coins in its digital wallet, Calibra.
"It went from this altruistic idea into their own wallet," Banga told the newspaper. "I'm like: 'this doesn't sound right.'"
Banga questioned how the network could be financially inclusive if people who are paid in Libra coins have to store them in Calibra wallets before converting back into dollars to buy goods. "I don't understand how that works," he said.
Facebook's Libra plans have faced intense scrutiny in recent months. EU competition regulators are probing them, and US lawmakers grilled CEO Mark Zuckerberg in October on subjects such as Facebook's handling of financial data, its cooperation with regulators, and why it wants to develop a substitute for the dollar.
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Theron Mohamed is a London-based correspondent on the International team at Business Insider. His coverage spans finance, investing, wealth, markets, and the economy.Theron joined BI in 2019 as a reporter at Markets Insider and rose to the rank of correspondent before moving to the Trending team then the broader International team. He previously covered tech, media, and telecom stocks for Investors Chronicle magazine and had a brief stint on the Financial Times' Data team. He interned at the Wall Street Journal in New York where he primarily wrote for Heard on the Street.Theron has freelanced for The Independent, The Telegraph, WIRED, and several smaller publications. He holds an undergraduate degree in geography from the London School of Economics, and a master's degree in journalism from Columbia University.Theron often covers Warren Buffett, Michael Burry, and other elite investors. He also writes about the world's wealthiest people and shares financial advice from all manner of rich and successful people.Email Theron at tmohamed@businessinsider.com and follow him on X @theron_mohamed.