The leaders of the Caisse de depot refused outright to comment yesterday on a probable loss of nearly $200 million in the American cryptobank Celsius Network.
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Made in October 2021, a month before the cryptocurrency market hit an all-time high, but how short-lived, the Caisse’s position in Celsius may well be one of the fastest-dissolving in history. of the institution founded 57 years ago.
“I was amazed to learn that a conservative institution [comme la Caisse] had invested in such a business,” the Log Omid Malekan, cryptocurrency specialist and lecturer at Columbia University in New York.
Photo taken from Twitter
Celsius Network CEO Alex Mashinsky (left) last year with investors who were then very happy with the performance of their investment in the cryptobank.
“The Worst of Crypto Lenders”
“Cryptocurrency lending in general has been a bad industry to invest in and Celsius was the worst crypto lender,” he added.
In February, the big boss of the Caisse de depot et placement du Québec (CDPQ), Charles Emond, defended the investment in Celsius, saying in particular that the institution was not interested “in speculating on crypto”.
However, notes Mr. Malekan, a direct investment in cryptocurrencies would probably have been less risky than in Celsius.
The company placed itself Wednesday safe from its creditors. In court filings in New York, she blamed her insolvency on “poor investment decisions” that left her with far more debt than financial assets.
As of Wednesday, Celsius had US$5.5 billion in liabilities (debts) and US$4.3 billion in assets, resulting in a deficit of nearly US$1.9 billion.
The fall in cryptocurrencies in the spring caused Celsius customers to withdraw billions of dollars from their accounts. The company responded by suspending all withdrawals on June 12.
“Celsius is not currently requesting permission [au tribunal] to allow customer withdrawals,” the company said.
In the legal documents, we learn that the problems of Celsius began as early as 2020, when deposits multiplied thanks to the explosion of cryptocurrencies. The company had difficulty investing these sums in a safe way in order to be able to pay its clients the returns it promised, which could reach 18%.
“Acceptable” speculation
“Clearly, everything that revolves around cryptocurrencies is something that is of the order of speculation,” said Franck Jovanovic, professor of economics and finance at TÉLUQ University, yesterday.
The specialist, however, refused to throw the stone at the Fund. He recalled that the major asset managers all invest in riskier securities in the hope of improving their performance. According to him, this practice is “acceptable” as long as it concerns only a small proportion of the total assets invested.
THE CELSIUS NETWORK CRYPTOBANK IN BRIEF
- Founded in 2017 by entrepreneur Alex Mashinsky
- 300,000 active users in June 2022
- Assets of US$6 billion as of June 2022
SOME KEY DATES
October 2021
La Caisse announces an investment in Celsius
November 2021
Israeli police arrest Celsius finance chief
June 2022
Celsius suspends all withdrawals
July 2022
Celsius takes shelter from its creditors