Social media giant Facebook’s cryptocurrency project Libra has been surrounded by controversies since it was announced. Regulators around the world have voiced concerns around Facebook’s lack of security measures to protect customer’s data after the Cambridge Analytica scandal, and the cryptocurrency’s potential threat to the global financial system. Amid intense regulatory scrutiny, Facebook has once again, been caught in a data leak scandal which makes the company’s ability to operate a global currency securely questionable.
Facebook Caught in a Fresh Data Leak Scandal
According to a report on Thursday, millions of Facebook user’s phone numbers are now floating online. The report suggests that the giant social media company’s data security system was bypassed.
According to report, the affected server houses more than 419 million records across various databases on users across locations, including 133 million records on U.S.-based Facebook users, 18 million of users from the United Kingdom, and 50 million records relating to Vietnamese Facebook users.
Libra’s Struggles With Regulations
Facebook introduced its proposed cryptocurrency project Libra around June and with the aim of providing payment services to billions of unbanked people across the world. This means that people would be able to send and receive Libra through WhatsApp. However, regulators across the world are not too comfortable with allowing Facebook to launch a global currency is capable of becoming a threat to the existing global financial system.
Recently, the European Central Bank’s Yves Mersch took a hit at Libra calling it beguiling but treacherous. He said,
“I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favor of the beguiling but treacherous promises of Facebook’s siren call.”
Also, in a meeting held between US delegates of the House of Financial Committee led by Chairwoman Maxine Waters with the Swiss authorities to discuss Libra, Chairwoman Walters stated,
“My concerns remain with allowing a large tech company to create a privately controlled, alternative global currency.”
Another Data Privacy Mess – An Omen of Libra’s Doom?
Recently, Facebook was in the news regarding the Federal Trade Commission (FTC) claiming that Facebook went against the law by failing to secure data from third parties, running ads through the use of customers’ phone numbers provided for security, and deceiving users that its facial recognition system was turned off by default. Consequently, Facebook was ordered to pay $5 billion, which at the time, was the second-largest fine ever levied by the FTC. Also, Facebook agreed to a series of new restrictions on its business. According to a statement by a group of FTC officials,
“The Order imposes a privacy regime that includes a new corporate governance structure, with corporate and individual accountability and more rigorous compliance monitoring,”
This latest news of data leak will only fan the flames of regulatory scrutinies and aggravate regulators’ concerns about Facebook’s inability to handle data efficiently, further reducing Libra’s chances of regulatory approval.
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