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Facebook should not be trusted with 'crazy' cryptocurrency plan, say US senators

Washington

US Democratic and Republican lawmakers said on Tuesday that Facebook Inc's track record of what they described as untrustworthiness should stand in the way of it launching a digital currency, labelling the plan "delusional" and "crazy" at a Senate hearing.

Facebook is fighting to get Washington onside after it shocked regulators and lawmakers with its announcement on June 18 that it was hoping to launch a cryptocurrency called Libra in 2020.

Since then the social media company has faced criticism from policymakers and financial watchdogs at home and abroad who fear widespread adoption of the digital currency by Facebook's 2.38 billion users could upend the financial system.

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"Facebook has demonstrated through scandal after scandal that it doesn't deserve our trust," Democratic senator Sherrod Brown, the ranking member of the Senate Banking Committee, said in his opening remarks. "We'd be crazy to give them a chance to let them experiment with people's bank accounts."

Mr Brown added during questioning that he thought it was "delusional" to think individuals would trust the social media company with their "hard-earned" money.

Before announcing its Libra plans, Facebook was already facing a backlash over mishandling user data and not doing enough to prevent Russian interference in the 2016 US presidential election.

David Marcus, the company's top executive overseeing the project, testified on issues ranging from how Libra could affect global monetary policy to how customer data will be handled. He received a frosty welcome from Democratic lawmakers and several Republicans, who shared many of the same concerns.

"I don't trust you guys," said Republican Senator Martha McSally. "Instead of cleaning up your house you are launching into a new business model."

Mr Marcus, who was president of PayPal from 2012 to 2014, tried to assuage concerns by promising that Facebook will not begin offering Libra until regulatory issues are addressed.

"We know we need to take the time to get this right," Mr Marcus, who was also due to testify before the House Financial Services Committee on Wednesday, told lawmakers.

Lawmakers raised a range of concerns, including about how the company plans to prevent money laundering, how consumers' data and funds will be protected and how the Geneva-based association created to run the system will be regulated.

"I know we have to earn people's trust for a very long period of time," Mr Marcus said when asked whether consumers could trust Facebook not to share their payment information. REUTERS

READ MORE: Will Facebook's Libra turn into a cancer?