Is Facebook’s much-hyped Libra a true cryptocurrency? The fate of a small London-based blockchain start-up, bought by the social-media giant in February, offers a clue to the controversy swirling in the crypto markets.

The purchase of Chainspace – founded in 2017 by six former researchers at University College London – was aimed at building Facebook’s crypto expertise in the run-up to Libra’s launch, according to investors who had put money behind the start-up.