$150 million crypto bet lost to Caisse de dépôt?

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

LES KEYS DE LA CRYPTO is a section that patiently deciphers the world of cryptocurrency and its stock market, industrial and media turmoil. François Remy’s mission is to identify up-and-coming entrepreneurs, decipher technological progress and anticipate the impact of this digital currency on industry and society.

(Illustration: Camille Charbonneau)

The snag in the woolen stockings of the Quebecers. A few months ago, CDPQ, believing it could take advantage of a good investment opportunity, placed its bet on cryptocurrency lender Celsius Network. But today the solvency of the partner is under serious question.

“A cohesive management team that puts transparency and customer protection at the core of its operations,” praised the senior vice president of Caisse de dépôt et Placement du Québec (CDPQ) when the Celsius Network investment was announced last October. A blockchain-based platform offering a complex return service and low-cost instant crypto loans.

Thinking they are dealing with a world-class company, the Quebec investment group has invested $150 million to support Celsius’ growth, which the new partners say is designed to remain a leader in the sector in terms of innovation and regulation. Adoption.

Rejected bid

Ironically, at the time of the investment, CDPQ Celsius was already under the guns of market authorities in Texas and New Jersey. The latter argued that the interest in the form of the CEL token represented an offer of an unregistered security.

A month later, in a twist of fate, Israeli police arrested Celsius’ chief financial officer in connection with external fraud and money laundering.

Last February, worried about this crypto-currency bet on public money, Quebec Solidaire called on Quebec’s financial police officer, AMF, to launch an investigation. Meanwhile, CDPQ officials have been quick to draw a distinction between investing in blockchain and not directly in cryptocurrencies.

Except that today Celsius is writing a new chapter in the history book about crises in the crypto ecosystem.

Responsible measure… of the crisis

“Due to extreme market conditions, we are announcing that Celsius is suspending all withdrawals, exchanges, and transfers between accounts,” the platform said, ensuring that it does so to fulfill its obligations and protect the interests of its community, including therefore. , cass depot.

It is that the company must restore its liquidity before restoring transactions “as quickly as possible”. In passing, recalling at the end of my blog, in the disclaimer, that these are forward-looking statements that involve uncertainty. Symptomatic language of the double crisis that the Celsius Network is experiencing, a crisis of confidence and a crisis of liquidity. One feeds the other and vice versa.

Hard hit by the collapse of the “Terra UST stablecoin,” a supposedly stable cryptocurrency that made high yields possible, Celsius has already drawn the ire of the crypto community, questioning its solvency.

Unusual token movements of over $300 million seen thanks to the blockchain on the main Celsius wallets then heightened fears and strengthened the default scenario. If the company is moving so “quietly”, it is because it has cash flow problems and hastened to hammer the cryptosphere on social media. The fugitive that the suspension of transactions certainly did not calm down.

Domino effect?

A less vague implication for now is the sharp drop in CEL, with the token shedding 50% in 24 hours to 21 cents.

The unhappiness of some people sometimes brings happiness to others, Celsius’s Swiss competitor, Nexo, has already made a takeover bid. Aware of the implications for its individual investors and community, the Zug-based company is offering to acquire some or all of its financial assets, brand elements and customer database.

Asked by Les Affaires about the financial risks incurred at a time when Celsius’ solvency is in serious question, CDPQ has not yet been able to respond.


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