Canada’s second-largest pension fund contributed to a $400m fundraising round for Celsius Network, a blockchain-based banking platform.
Caisse de dépôt et placement du Québec (CDPQ) invested in Celsius alongside private equity firm WestCap Group, which has also launched technology companies like Airbnb and Klarna. The investment reflects a total valuation of more than $3bn for Celsius.
“Blockchain technology has the potential to disrupt several sectors of the traditional economy,” Alexandre Synnett, executive vice president and chief technology officer at CDPQ, said in a statement. “As digital assets grow in adoption, we intend to capture the right opportunities, while working with our partners towards a regulated industry.”
About Celsius Network
Celsius separates itself from traditional banks by offering its customers compounding yield services and instant low-cost loans through its mobile and web-based platforms. Customers can transfer their cryptocurrency to Celsius in exchange for cash loans. Users can also loan their coins among each other for up to 9% annual interest, according to its white paper.
However, the Hoboken, New Jersey-based company has also been accused of malfeasance by several US states, according to reports from Bloomberg. Regulators in Texas, New Jersey, and Kentucky have all sent the company cease-and-desist letters for selling securities that are not licensed.
Alex Mashinsky, CEO of Celsius, told the Financial Times that he hopes the fundraising round will reassure regulators that the company is legitimate.
“It’s not the $400m. It’s the credibility that comes with the people who wrote those cheques,” Mashinsky said.
Capital.com reached out to Celsius to confirm Mashinsky’s quote but did not receive an immediate response.
Despite the regulatory concerns, Celsius has seen its network grow considerably since launching in 2017.
As of 8 October, the company said it holds $25bn in total assets with more than one million users on its platform. It has also paid out more than $850m in interest payments over the last three years.
It was this impressive growth that initially attracted WestCap and CDPQ to the investment, according to Laurence Tosi, WestCap’s founder.
“While the current regulatory attention is new, Alex Mashinsky and Celsius' ethos has long echoed the sentiment regulators are trying to put forth in terms of consumer protections,” Tosi said in a press release. “Celsius is committed to working constructively with regulators to better understand the dynamic crypto space, protect retail customers from fraud and undue risk, and create general consumer knowledge to allow for thoughtful investment decisions.”