The 709 carats diamond was discovered by Emmanuel Momoh, a Sierra Leonean pastor who found it in the Kono district of the country in March and handed it over to the government to sale.
According to the chief auctioneer and head of the National Minerals Agency, Sahr Wonday, he said five bids were handed to auctioneers in a sealed brown envelope, ranging from $2 million to $7.8 million.
He said the top bid was made by a man in a white shirt and light trousers on behalf of Belgium diamond dealer Ray Diam BVBA but was actually rejected as it fails to meet the country's valuation.
We've decided not to sell the diamond today because the highest bid price ... does not match the government reserve price,' He told a packed room.
Reacting to the diamond auction fails, Pastor Emmanuel said: 'I was unhappy with the highest bid price," said Momoh. His stone, he said, "is worth a lot more than $7.8 million."
The diamond is the biggest to be in Sierra Leone since 1970, when the 969-carat Star of Sierra Leone was dug up.