Bankruptcy of the Celsius Network cryptobank | The silence of the CDPQ criticized

The silence of the Caisse de depot et placement du Québec (CDPQ) regarding its bet of around 200 million CAN in Celsius Network is criticized by the governance community and the opposition, who call the manager of the bottom of wool of Quebecers to be accountable.

Julien Arsenault
The Press

Nine months after presenting the American cryptobank as a “world-class company”, the Quebec manager of public and parapublic pension and insurance plans saw its partner place itself under the protection of American bankruptcy law.

The CDPQ still refuses to explain how its due diligence prompted it to inject millions – which are in danger of flying away – into a company that collapsed following the plunge in cryptocurrency prices.

“We can understand, in an economy that was doing well, the idea of ​​betting on something more marginal. But 200 million is still money. Once it crashes, they have a duty of transparency, ”believes Luc Bernier, professor at the Graduate School of Public and International Affairs at the University of Ottawa.

The Caisse’s assets amounted to 420 billion on 31 December last. The potential loss in Celsius Network may seem minimal. But if there is no “small profit”, there is no “small loss”, believes Robert Pouliot, consultant in the causes of fiduciary risk and lecturer at UQAM.

In his opinion, the silence of the CDPQ is not “normal”.

rapid breakup

The past few months have been tumultuous for Celsius Network, which pools deposits of cryptocurrencies – like bitcoin – to then offer loans and interest that exceed 10%. These platforms are not regulated, and depositors’ assets are not protected.

Struggling with a liquidity crisis due to the collapse of cryptocurrency prices, the company froze withdrawals from its 1.7 million depositors on June 12. She appealed bankruptcy law on Wednesday, which means depositors could lose big. When it filed for bankruptcy, there was a $1.9 billion hole in its finances, according to documents presented in New York courts.

Professor of accounting sciences at UQAM and specialist in governance, Saidatou Dicko stresses that there is no “obligation” for the CDPQ to explain itself. However, the current context is particular.

“Given the very short time between investment and bankruptcy and out of respect for the people of Quebec, a press conference or a statement would be reasonable,” she said. Two hundred million is starting to be a lot for highly volatile assets. »

Now or not?

The opposition is asking the CDPQ to account, but we do not agree on the moment. Spokesperson for Quebec solidaire on economic issues, Ruba Ghazal hopes that the light will be shed quickly. The Legault government should even demand it, she adds.

On the side of the Liberal Party of Quebec, the spokesperson for economic issues, Carlos Leitão, believes that it is better to wait until the fate of Celsius Network is sealed.

Surprised to see the CDPQ and other institutional investors taking an interest in platforms like Celsius Network, the former finance minister said he was troubled by the recent lawsuit filed against the cryptobank by a former business partner. It is alleged in particular that the company had orchestrated a Ponzi scheme, in addition to having manipulated cryptoassets.

“If the Caisse was not aware, it’s troubling, and if it knew and invested anyway, it’s just as troubling,” says Mr. Leitão. These questions must be answered. »

The Legault government did not want to comment. The office of the Minister of Finance, Eric Girard, responsible for the CDPQ, limited itself to recalling, in a declaration, that the institution had to “protect the savings of Quebecers”. The investment in Celsius Network represents only a “tiny part of the Caisse’s portfolio”, according to Quebec.