Cryptocurrencies |  The controversial partner of the CDPQ protects itself from its creditors

Cryptocurrencies | The controversial partner of the CDPQ protects itself from its creditors

Nine months after injecting nearly 200 million CAN into the Celsius Network, calling it a “world-class company,” the Caisse de depot et placement du Québec (CDPQ) sees the controversial crypto bank shielding itself from its creditors. Losses seem inevitable for Quebecers’ wool socks.

Updated yesterday at 22:08

Julien Arsenault

Julien Arsenault

Facing what was seen as a liquidity crisis after freezing withdrawals and transfers for its 1.7 million customers on June 12, the company filed for Chapter 11 bankruptcy on Wednesday night, with the hope to restructure and survive. Depositors and shareholders stand to lose a lot.

The CDPQ, which had participated last October in a funding round of at least $500 million with the WestCap fund, was stingy with the comments.

“We are closely following the file and reviewing the documentation submitted by Celsius,” said a spokeswoman for the institution, Kate Monfette. We cannot comment further at this time. »

The Quebec pension plan administrator has not yet said how its due diligence process convinced it to invest in a company that collapsed in the months after the transaction.

“If there is no new capital, [les actionnaires comme la CDPQ] you will lose everything,” said Martin Lalonde, portfolio manager at Rivemont, a firm that offers a bitcoin-based mutual fund.

In the world of cryptocurrencies, there is no company that has overcome a situation like this without everyone losing everything.

Martin Lalonde, Portfolio Manager at Rivemont

According to the first documents filed by Celsius Network with the New York courts, the CDPQ had a stake of approximately 4.8%.

controversial model

Platforms like Celsius Network pool cryptocurrency deposits. They offer loans and interest, often above 10%, to depositors, 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 put the crypto bank in a precarious financial situation.

In the United States, Celsius Network was under the scrutiny of the stock market police, who wanted to monitor these new players in finance. On Tuesday, the Vermont Department of Finance had estimated, in a warning, that the CDPQ partner was “highly insolvent.”

Celsius Network says it has $167 million in its coffers, which should allow it to continue business and pay its employees, in particular. He did not specify how he intended to get up. Two new directors have been appointed and the services of three external advisers specialized in restructuring have been maintained.

“This is the right decision for our community and our business,” cryptobank co-founder and CEO Alex Mashinsky said in a statement.

several more questions

According to the documents that start the judicial restructuring proceedings, Celsius Network has more than 100,000 creditors. The platform estimates its assets to be worth between US$1 billion and US$10 billion. The range was identical with respect to its claims.

We saw the decision coming. When you prevent your depositors from withdrawing their balls, it is proof that there are no solutions to get out of there.

Martin Lalonde

Celsius Network’s problems are not limited to its financial situation. Since last week, the platform has been the subject of a lawsuit filed by a former business partner, who accuses it of having orchestrated a Ponzi scheme and manipulated crypto assets, in particular.

Celsius Network is not the only platform struggling to survive. Voyager Digital has also shielded itself from its creditors, while Three Arrows Capital is in bankruptcy proceedings.

More information

  • 3 billion
    The funding round that CDPQ participated in last fall valued Celsius Network at $3 billion.

    source: Caisse de Depot et Placement du Québec

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