A $150M crypto bet lost for the Caisse de dépôt?

Ironically, at the time of CDPQ’s investment, Celsius was already in the crosshairs of market authorities in Texas and New Jersey. (Photo: Getty Images)

LES KEYS DE LA CRYPTO is a section that patiently decodes the world of cryptocurrency and its stock market, industrial and media turmoil. François Remy’s mission is to identify promising entrepreneurs, decode technical progress and anticipate the industrial and societal impacts of this digital currency.

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A hitch in the woolen stockings of Quebecers. Believing to seize a good investment opportunity a few months ago, the CDPQ had bet on the Celsius Network cryptocurrency lender. But today, the solvency of the partner is seriously questioned.

“A solid management team that places transparency and customer protection at the heart of its activities”, praised the senior vice-president at the Caisse de dépôt et placement du Québec (CDPQ) when announcing the investment in Celsius Network last October. A blockchain-based platform offering a compound return service and low-cost instant cryptocurrency loans.

Believing that it was dealing with a world-class company, the Quebec investment group had injected 150 million US dollars to support the growth of Celsius, called, according to the new partners, to remain the leader in the sector in terms of innovation and regulatory acceptance.

Decried bet

Ironically, at the time of CDPQ’s investment, Celsius was already in the crosshairs of market authorities in Texas and New Jersey. The latter alleged that the interest in the form of a token, the CEL, constituted an offer of unregistered security.

A month later, ironically, Israeli police arrested Celsius’ chief financial officer in connection with an external fraud and money laundering case.

Last February, worried about this crypto bet with public money, Quebec Solidaire had urged the Quebec financial policeman, the AMF, to open an investigation. Meanwhile, CDPQ officials did not fail to force the distinction between investment in the blockchain and not directly in cryptocurrency.

Except that Celsius is writing a new history textbook chapter today about meltdowns within the crypto ecosystem.

Responsible measure… of crisis

“Due to extreme market conditions, we are announcing that Celsius is suspending all withdrawals, exchanges and transfers between accounts”, informed the platform, ensuring that it is doing so to meet its obligations and defend the interests of its community, including, therefore. , the Caisse de depot.

It is that the company must recover its liquidity before restoring transactions “as quickly as possible”. Recalling in passing at the end of his blog, in a disclaimer, that these are forward-looking statements involving uncertainties. A symptomatic language of the double crisis that Celsius Network is going through, crisis of confidence and crisis of liquidity. One feeding the other, and vice versa.

Heavily affected by the collapse of the “Terra stablecoin UST”, a supposedly stable cryptocurrency thanks to which exuberant returns were possible, Celsius was already drawing the wrath of the crypto community questioning its solvency.

Unusual movements of tokens for a sum of more than US$300 million, observed thanks to the blockchain on the main wallets of Celsius, then heightened fears and reinforced the default scenario. If the company is moving so “silently”, it is because it is having cash flow problems, it was quick to bludgeon the cryptosphere on social networks. A runaway that the suspension of transactions has certainly not calmed down.

Domino effect?

The less vague consequence for the time being remains the plummeting of the CEL, the token losing 50% over 24 hours to quote at 21 cents.

The misfortune of some sometimes making the happiness of others, Celsius’ Swiss competitor Nexo has already issued a takeover bid. Aware of the repercussions for their individual investors and the community, the Zug-based company proposes to acquire part or all of the financial assets, brand elements and customer database.

Asked by Deals As for the financial risks incurred at a time when the solvency of Celsius poses a serious question, the CDPQ has not yet had the opportunity to react.




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A $150M crypto bet lost for the Caisse de dépôt?


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