Cryptocurrencies | An uncertain future for Celsius Network, which received millions from the CDPQ

The adventure of the Caisse de depot et placement du Québec (CDPQ) in cryptocurrencies turns into a nightmare after only eight months. Its partner, Celsius Network, is suspending customer withdrawals due to a cash crunch – raising fears for the worst about its continued operations.

Julien Arsenault
The Press

Richard Dufour
The Press

“Suspending activities like this is an extreme plan that destroys trust in any business,” said Phillippe Jetté, senior cryptocurrency analyst for the Rivemont Crypto Fund at the firm Rivemont Investissements. So the situation is absolutely critical. »

Celsius had justified its decision on Sunday evening, citing extreme market conditions. Like the stock markets, cryptocurrencies were jolted, causing a surge of nervousness among investors. Some, however, had unpleasant surprises when trying to recover their assets deposited with cryptobanks like Celsius.

These platforms pool deposits of cryptocurrencies like bitcoin and offer loans and interest, often above 10%, to depositors, which is much higher than what traditional banks offer.

The problem is that these new players are not yet regulated and nothing protects depositors’ money. In addition, they are not subject to a minimum capital threshold in their reserves, unlike traditional financial institutions.

“The next few hours and days will be crucial, but Celsius in its current model […] is probably already dead and buried,” underlines Mr. Jetté.

Questions

Portfolio manager at Rivemont, Martin Lalonde believes that the cryptocurrency sector is promising. He is therefore not throwing the stone at the CDPQ despite the turn of events.

“What we can say is that they didn’t bet on the right colt when they left,” says Mr. Lalonde.

In its most recent annual report, the Caisse estimated that its investment in Celsius fluctuated between 150 and 300 million. Eight months ago, the institution announced with great fanfare its participation, with the WestCap fund, in a financing round of 400 million US dollars in Celsius.

These two investors believed at the time that this cryptobank was a “world-class company”. Celsius was valued at some US$3 billion.

Monday morning, the CDPQ had not commented on the situation at Celsius. Nor did she explain the due diligence process that prompted him to bet millions on a company whose existence is uncertain eight months later.