CDPQ Loses Hope on $150M Celsius Bet

Celsius filed for Chapter 11 bankruptcy last month. 

CDPQ Writes Off a Loss

Crypto enthusiasts may have once said that “the institutions are coming,” but in 2022, it feels more accurate to say that “the institutions are leaving.” 

CDPQ is the latest titan to leave the space altogether after investing $150 million in Celsius Network in an October 2021 raise. The Canadian pension fund revealed it had written off its investment and suggested it was walking away from crypto at its latest results meeting. “For us, it is clear, when we look at all of this, we arrived too soon in a sector which was in transition,” said the firm’s president and CEO Charles Émond. 

CDPQ backed Celsius in a $400 million funding round that valued the firm at $3 billion, saying at the time that it highlighted its “conviction” in blockchain. The crypto market peaked when Bitcoin hit $69,000 only a few weeks later, setting the stage for a months-long downturn that washed out Celsius and other crypto lenders. 

Until its collapse, Celsius operated by promising customers lucrative returns on their crypto deposits. It captured yield by putting capital to work in DeFi protocols and other products like Grayscale’s GBTC fund, but faced insolvency issues when the market crashed in the fallout from Terra’s blowup in May. Celsius became the first of several major crypto lenders to halt customer withdrawals in June then filed for Chapter 11 bankruptcy a few weeks later. It now has a $1.2 billion hole in its balance sheet and its customers are unlikely to see their funds returned since its terms and conditions stipulated that they gave the firm the right to use their funds when they made deposits. 

Discussing CDPQ’s bet on Celsius, Émond added that the institution was weighing its legal options. CDPQ is Canada’s second-largest pension fund with a net asset value of around $325 billion. It was one of several major firms to flock to the crypto space in 2021 as the market rallied, but not all of them have stuck around. Ruffer, for example, bought into Bitcoin in late 2020 and sold its holdings after just five months, netting about $1.1 billion in the process. More recently, Tesla sold 75% of its Bitcoin holdings in the second quarter as the top crypto plummeted. Thanks to Celsius, it looks like CDPQ may not have so much conviction in crypto for the long-term either.