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Facebook has been having a tough time dodging lawsuits with respect to its crypto-project. The social media giant rebranded its crypto project from Libra to Diem and announced it on 1 December. However, this rebranding has resulted in another lawsuit lining up from a London-based Fintech company.
According to reports, Diem, a London Fintech startup has threatened to sue Facebook and its partners for copying its name and has been preparing to take necessary action.
Facebook has been eying to launch its digital coin since 2019 but has met with various hurdles along the way. These included regulatory hurdles which led to its partners dropping out, and eventually it had to put the plan on hold for a while. However, now that it had managed to work on its proposal to suit the regulators, the rebranding has put it once again in hot water.
The idea for Facebook to rebrand Libra to Diem was to give the project a fresh start and to distance itself from the original format. This would have served the image of the crypto project better and might even create a positive buzz for the project. However, it may have forgotten to do a bit of research, as the name is already taken.
The Diem application began a soft-launch in October and has nearly 500,00 Instagram followers. This indicated its established presence. The application has been called a digital pawnbroker of sorts as it allowed users to sell their possessions in no time. It also provided the users DIEM debit cards and accounts, and called the service as ‘Bank of Things.’
The founder and CEO of Diem, Geri Cupi said:
“We were flabbergasted on 1st December to find that Facebook’s Libra Foundation had chosen to rebrand to Diem… As a small startup, we are concerned that customer confusion resulting from Libra’s actions will significantly impact our growth.”
Although it is going to be an uphill battle for a small fintech to take on a social media giant like Facebook, Diem’s backers are ready for it. Chris Adelsbach — one of Europe’s most prominent fintech investors and one of Diem’s backers stated:
“We thought, ‘do we concede and just say ‘we’re a small company,’ or do we fight for what’s right”
After deliberation, legal experts advised the company to protect their brand and Adelsbach added:
“It wouldn’t have taken that much effort for Facebook to find out if there’s another Diem in financial services… They obviously took the view that “we can just crush them, we’re Facebook.”
The lawsuit might once again push Facebook’s digital currency on hold. It has been awaiting approval from Swiss market watchdogs, which might also suffer.