Crypto collapse: a partner of the Caisse de dépôt in hot water

The announcement came eight months after the day CDPQ had invested US$ 150 million in Celsius, a company that offers loan services in the cryptocurrency universe.

Due to extreme market conditions, we announced today that Celsius is pausing all withdrawals, trading and transfers between accounts.the company wrote in a statement. (New window) sent to your customers just before 11pm on Sunday.

We understand that this is difficult news, but we believe that our decision […] is the most responsible action we can take to protect our communitypress release continues.

As Radio-Canada reported in late May, Celsius was hit hard by a slump in cryptocurrency prices that took place in the week of May 9. Some customers of the platform complained that they lost everything after getting cryptocurrency loans from Celsius.

Since then, Celsius has struggled to recover. According to company statistics, the company lost nearly $2 billion in customer deposits last month. Celsius said in October that it manages $27 billion of crypto assets on behalf of its clients. That number dropped to $12 billion in May. Since then, the company no longer publishes the total assets it manages on its website.

The value of CEL, the cryptocurrency the company created and encourages its customers to use, has plummeted from around $3 in April to $0.20 today. at the time of investment CDPQthe price of CEL was US$ 5.60.

Screenshot of Celsius website

Photo: Screenshot – Celsius Network

Cryptocurrency price collapse

Current cryptocurrency market conditions indicate that Celsius is likely not out of the woods. Most major cryptocurrencies fell over the weekend as a wave of panic hit the market, driven in part by worrying economic indicators hitting the global economy.

As of Monday morning, the S&P 500 lost more than 3% of its value, while the Dow Jones lost just over 2.5%. These two indices are having a rough year: they’re down 21.4% and 16.3%, respectively, since the start of 2022.

The price of bitcoin, the most popular cryptocurrency, dropped nearly 16% in 24 hours on Monday morning. From a peak of over $67,000 in November 2021, the normally highly volatile price of bitcoin is now at just over $23,000.

For Hilary J. Allen, a law professor at Washington College of Law and an expert on cryptocurrency regulation, it is not surprising to see the cryptocurrency market collapse in the current economic circumstances.

It’s no surprise that in an environment of rising interest rates, easy money comes out of the system. There is less money to invest in cryptocurrenciesshe judges.

Allen says investors who have placed crypto alongside Celsius could be hit hard if the company collapses.

For people who didn’t have a lot of means to invest in it, it’s potentially devastating. we came with [l’effondrement des cryptomonnaies Terra et Luna à la mi-mai] that there was at least one suicide. People were posting suicide prevention threads in groups on Reddit and so on. I suspect we’ll see the same thing with Celsius, because a lot of people have invested a lot of money that they couldn’t afford to lose.adds Mrs. Allen.

A criticized business model

Celsius CEO Alex Mashinsky

Photo: Screenshot – LinkedIn

By investing in Celsius, the CDPQ praised the company’s business model. Blockchain technology has disruptive potential for several sectors of the traditional economysaid Alexandre Synnett, senior vice president and chief technology officer at CDPQin a press release.

Radio-Canada’s investigation identified concerns raised by experts in the cryptocurrency field, who pointed out that Celsius uses financial practices similar to those that led to the implosion of the financial system in 2008. Several US states further claimed that the company was selling unregistered securities and forced the company to limit its activities in the United States.

The Federal Department of Finance, which did not comment specifically on Celsius, ruled that companies that act unregulated – as Celsius does – are doing business illegally in Canada.

The report also revealed that Celsius has in his orbit several individuals who find themselves at the center of controversy in the cryptocurrency world, including a person linked to websites that Canadian financial authorities are keeping an eye on.

In response to questions arising from our investigation that raised concerns about Celsius’ activities, the CDPQ reiterated its support for the company. All Caisse investments are subject to a rigorous review process to make informed decisions in the interests of our depositorsreplied a spokeswoman.

Attached on Monday morning, a spokesperson for the CDPQ ensured that Caisse follows very closely what is happening in Celsius.

Celsius has been affected by very difficult market conditions in recent weeks, mainly due to the high volume of customer deposit withdrawals. Celsius acts proactively to fulfill its obligations to its customers [la communauté Celsius] and has honored its commitments to its customers until now.

Discouragement among customers

Sunday night’s announcement caused consternation among Celsius customers. In response to the company’s tweet about the transaction freeze, many customers criticized the decision. The radio silence of the company’s CEO, Alex Mashinsky, also reacted.

Alex constantly tweets, he brags that Celsius is a wonderful company, he criticizes other platforms. And now, when we desperately wait to hear him, he is silent. He offered no updates as the community faces this ordeal. IT’S DISGUSTINGwrote a customer in a Celsius community Telegram group.

In response to a customer tweet on Saturday, Alex Mashinsky responded: Do you know someone who had trouble withdrawing their funds from Celsius? Why are you sharing fear and misinformation?

Celsius did not answer our questions.

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