Nine months after Celsius Network injected nearly 200 million CAN and described it as a “world-class company,” Caisse de Depot et Placement du Québec (CDPQ) sees the controversial crypto bank shielding itself from its creditors. Losses seem inevitable for the Quebecers’ woolen socks.
Posted at 21:01
Updated at 10:08 p.m
Facing what was seen as a liquidity crisis after a June 12 freeze on withdrawals and transfers from its 1.7 million customers, the company turned to Chapter 11 of America’s bankruptcy law on Wednesday night in hopes of restructuring and surviving . Depositors and shareholders face huge losses.
CDPQ, which joined the WestCap fund in at least a half-billion-dollar round of funding last October, was stingy with comment.
“We are closely following the file and reviewing the documentation provided by Celsius,” said institution spokeswoman Kate Monfette. We are currently unable to comment further on this. »
The Quebec pension plan manager still hasn’t revealed how his due diligence process convinced him 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 Bitcoin-based mutual fund. In the cryptocurrency world, there is no company that made it through such a situation without everyone losing everything. »
According to the first filings Celsius Network filed with the New York courts, the CDPQ held a stake of around 4.8%.
Platforms like Celsius Network pool cryptocurrency deposits. They offer depositors credit and interest rates often in excess of 10%, which is much higher than what traditional banks offer. These platforms are not regulated and depositors’ assets are not protected. The collapse in cryptocurrency prices has left the crypto bank in a precarious financial situation.
In the US, Celsius Network was under the scrutiny of the stock exchange police, who wanted to monitor these new financial players. On Tuesday, the Vermont Department of Treasury issued a warning that CDPQ’s partner was “highly insolvent.”
Celsius Network says it has $167 million in its treasury, which should allow it to continue its operations and pay its employees in particular. She did not indicate how she wanted to get up. Two new directors were appointed and the services of three external consultants specializing in restructuring were retained.
“This is the right decision for our community and our business,” Alex Mashinsky, the crypto bank’s co-founder and CEO, said in a statement.
Several more questions
Celsius Networks has more than 100,000 creditors, according to documents beginning the reorganization court process. The platform estimates that her fortune is worth between $1 billion and $10 billion. The range was identical in terms of its claims.
“We saw the decision coming,” said Mr Lalonde. Preventing your depositors from withdrawing their balls is proof that there are no more solutions to get out of it. »
Celsius Network’s troubles aren’t just limited to its financial situation. Since last week, the platform has been the subject of a lawsuit from a former business partner who accuses it of staging a pyramid scheme and manipulating cryptoassets in particular.
Celsius Network isn’t the only platform struggling to survive. Voyager Digital has also secured against its creditors while Three Arrows Capital is in bankruptcy proceedings.
- 3 billion
- The funding round in which CDPQ participated last fall valued Celsisus Network at $3 billion last fall.
Caisse de depot and Placement du Quebec