SAN JOSE, Calif.—PayPal reportedly has pulled out of Facebook’s Libra project over concerns the social media giant has failed to address a backlash to the cryptocurrency project related to money laundering concerns.
The Financial Times reported PayPal failed to attend a meeting of Libra’s 28 backers in Washington to discuss regulatory concerns.
“It doesn’t seem that there was a lot of pre-work done with regulators,” a source told the Financial Times. “[Payments] companies don’t want that [regulatory scrutiny] to bleed into their businesses.”
Visa, Mastercard and Stripe also are reported losing interest in the project, wary of attracting regulatory scrutiny, International Business Times added.
David Marcus, who is leading Libra’s development, tweeted “legitimate concerns” are being addressed and setting up the currency will take courage.
Each of the Libra Association members was to put up $10 million to participate in the project, aimed at shaking up the global payments system. Participation has yet to be formalized though a meeting is set for Geneva to finalize the structure, International Business Times stated.
Child Exploitation Concerns
Separatley, PayPal is undertaking an urgent audit of its global money transfers business given "ongoing concerns" it is being used by child exploitation rings in Asia, ABC.net reported.
Australia's financial intelligence agency has ordered PayPal Australia to appoint an external auditor to probe suspicions that the international funds transfer platform could be used to facilitate online child abuse material.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) said it is investigating PayPal's compliance with international funds transfer obligations to or from Australia.
In a statement, AUSTRAC singled out child sex exploitation as a risk that prompted the regulatory intervention, ABC.net said.
PayPal Australia was working with global crime agencies given there is evidence that online payments platforms have been exploited by child sex rings, AUSTRAC chief executive Nicole Rose stated.