Cryptocurrencies | The controversial partner of the CDPQ protects itself from its creditors

Nine months after having injected nearly 200 million CAN into Celsius Network, calling it a “world-class company”, the Caisse de depot et placement du Québec (CDPQ) sees the controversial cryptobank sheltering itself from its creditors. Losses seem inevitable for the woolen socks of Quebecers.

Julien Arsenault
The Press

Faced with what was seen as a liquidity crisis after freezing withdrawals and transfers from its 1.7 million customers on June 12, the company turned to Chapter 11 of the American law on Wednesday evening. on bankruptcies, hoping to restructure and survive. Depositors and shareholders stand to lose big.

The CDPQ, which had participated in a financing round of at least half a billion dollars last October with the WestCap fund, was stingy with comments.

“We are following the file closely and reviewing the documentation presented by Celsius,” said a spokesperson for the institution, Kate Monfette. We are unable to comment further at this time. »

The Quebec pension plan manager has still not specified how its due diligence process convinced it to invest in a company that collapsed in the months following the transaction.

“If there is no new capital, (shareholders like the CDPQ) will lose everything,” says Martin Lalonde, portfolio manager at Rivemont, a firm that offers a mutual fund based on bitcoin. In the world of cryptocurrency, there is no company that has made it through a situation like this without everyone losing everything. »

According to the first documents filed by Celsius Network with the New York courts, the CDPQ held a stake of approximately 4.8%.

Controversial model

Platforms like Celsius Network pool cryptocurrency deposits. They offer loans and interest, often above 10%, to depositors, which is much higher than what traditional banks offer. These platforms are not regulated and depositors’ assets are not protected. The collapse of cryptocurrency prices has put the cryptobank in a precarious financial situation.

In the United States, Celsius Network was under the magnifying glass of the stock market police, who wanted to supervise these new players in finance. On Tuesday, the Vermont Department of Finance had estimated, in a warning, that the partner of the CDPQ was “highly insolvent”.

Celsius Network says it has 167 million US in its coffers, which should allow it to continue its activities and pay its employees, in particular. She did not specify how she intended to get up. Two new directors have been appointed and the services of three external advisers specializing in restructuring have been retained.

“This is the right decision for our community and our business,” cryptobank co-founder and CEO Alex Mashinsky said in a statement.

Several more questions

According to documents that kick off the restructuring court proceedings, Celsius Networks has more than 100,000 creditors. The platform estimates that its assets are worth between US$1 billion and US$10 billion. The range was identical with respect to its claims.

“We saw the decision coming,” said Mr. Lalonde. When you prevent your depositors from withdrawing their balls, it is the proof that there are no more solutions to get out of it. »

Celsius Network’s troubles are not limited solely to its financial situation. Since last week, the platform has been the subject of a lawsuit filed by a former business partner, who accuses him of having orchestrated a Ponzi scheme and manipulated cryptoassets, in particular.

Celsius Network isn’t the only platform struggling to survive. Voyager Digital has also protected itself from its creditors, while Three Arrows Capital is in insolvency proceedings.