Canadian Watchdog Eyes Celsius, Spurred by Pension Fund Deal: Report

Canadian regulators have been reportedly spurred to investigate bankrupt crypto lender Celsius due to last year’s equity deal with Quebec’s largest pension fund manager.

Quebec’s Autorité des marchés financiers (AMF) is one local agency officially looking into the lender since mid-June, the Financial Post reported on Tuesday, citing sources with knowledge of the probe.

Celsius suspended withdrawals on its platform on June 12, citing liquidity issues arising from the crypto market downturn. The firm filed for bankruptcy in New York one month later. A court document showed the firm has $5.5 billion in liabilities and a $170 million cash balance.

Most relevant to Quebec was that local pension fund manager Caisse de dépôt et placement du Québec (CDPQ) had plowed $150 million into Celsius last October, part of a $400 million fundraising round for the lender. The firm is Canada’s second-largest pension fund, having boasted more than $325 billion in assets under management at the end of 2021.

CDPQ’s willingness to join Celsius’ equity raise showed appetite to swallow any regulatory hiccups that might arise for the crypto startup. Celsius was not registered with securities regulators in Canadian provinces, according to the Financial Post.

CDPQ’s chief technology officer Alexandre Synnett at the time told the Financial Times that the pension fund’s Celsius stake didn’t mean a direct allocation to cryptoassets. CDPQ had bought Celsius equity with no apparent direct exposure to digital assets. The firm last month acknowledged that its Celsius investment hadn’t paid off.

In any case, Quebec’s finance watchdog is now coordinating with the US Securities Exchange Commission, which is also working with state investigations, reported Financial Post. Texas, Alabama, Kentucky, Washington and New Jersey are already looking into Celsius’ dealings on priority.

CDPQ has previously acknowledged Celsius’ difficulties, noting the strong volume of withdrawals by customers. “Celsius is taking proactive action to uphold its obligations to its customers and has honoured its obligation to its customers to date,” the pension manager told Blockworks in a June 14 email. “Our team is closely monitoring the situation.”

The AMF is reportedly focused on probing whether anyone in Quebec has been affected by Celsius’ insolvency and if they have assets tied up in the network.

The securities regulator of Ontario — where it’s known that users have been impacted — is also looking into the matter, Financial Post said, citing sources.

The Ontario Securities Commission declined to comment on the matter. “As a matter of general policy, the OSC is unable to confirm or comment on the existence, status or nature of any complaint, review or investigation,” a spokesperson said in an email to Blockworks. The AMF also declined to comment.

This story was updated on August 10 at 11:15 am ET.

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