• Celsius’ valuation has jumped 2,542.3% from a pre-money valuation of $123 million last year to $3.25 billion today
  • The Canadian-based CDPQ has over $400 billion in investments, but this is its first cryptocurrency-based investment, Mashinsky and CDPQ said

The crypto lending network Celsius has closed a $400 million investment led by West Cap and Caisse de dépôt et placement du Québec (CDPQ), bringing its valuation to $3.25 billion, Alex Mashinsky, CEO of Celsius, told Blockworks on Tuesday. 

The Canadian-based CDPQ has over $400 billion in investments, but this is its first cryptocurrency-based investment, Mashinsky and CDPQ said to Blockworks.

“To cross the divide and place some bets on this new asset class is an extremely (rare) thing you don’t see from major institutions,” Mashinsky said. “They understand this better than others and are moving in faster than people you would say would be fast movers. They saw the opportunity and decided to lead the round with WestCap,” he added.

The investment will help diversify CDPQ’s assets in the traditional financial sector while positioning it in the FinTech sector as well, Alexandre Synnett, executive VP and chief technology officer at CDPQ, said in an email to Blockworks.

“We consider this an appropriate time to invest in this new asset class by adopting a thoughtful approach and working with our partners towards regulation of the industry,” Synnett added.

Four-year-old Celsius previously raised about $22 million in a community round and $37 million in an initial coin offering, bringing its total raise to $459 million, Mashinsky said. He added that Celsius’ valuation has jumped 2,542.3% from a pre-money valuation of $123 million last year to $3.25 billion today.

During the same time frame, the company’s total assets passed the $25 billion mark, up 25 times from $1 billion a year ago, he said. Additionally, the platform has about 1.1 million users, up about 495% from around 185,000 users on the year-ago date.

Regulatory headwinds

The funding comes at a time where Celsius and others are experiencing regulatory headwinds as US regulators crack down on the crypto industry and companies that offer yields on digital assets. 

In late July, multiple states including New Jersey, Alabama and Texas filed complaints that BlockFi was offering unregistered securities to clients through its high-yield interest account service, Blockworks previously reported

Earlier this year, Celsius separately faced Cease and Desist Orders from state authorities in Texas and New Jersey that alleged the company’s yield-growing accounts for users were selling and offering unregistered securities.  

Mashinsky said regulators want to know that if Celsius made a mistake, would they have enough capital to make sure everyone on the platform would get the money back? The answer is yes, he said, and that this capital raise will show the Celsius community and regulators that they are good actors and will put their community first.

“Our users want to feel comfortable, especially with the recent regulatory scrutiny, they want to see the company is well capitalized and that we can raise money. And the regulators are concerned about users and also want to see if the company is well capitalized,” Mashinsky said. 

Celsius and similar companies are not regulated like traditional banks and brokerage firms, so investors’ losses are not insured against or protected by the Securities Investor Protection Corporation or the Federal Deposit Insurance Corporation, the US Acting Attorney General Andrew Bruck said in a statement in September. 

“Due to the volatility of the cryptocurrency market and the lack of regulatory oversight, these platforms present a heightened risk of loss to investors,” Bruck added. 

Mashinsky said that as more crypto companies begin to understand yield offerings, they are scrambling to copy companies that have established their yield offerings like Celsius has. But at the same time, these new players are also offering all kinds of high-risk things to customers, so regulators view them differently, he said.

He didn’t disclose which companies he thinks are engaging in these practices, but said that Celsius will continue to take responsibility in offering yield on assets that will exist long-term. 

“We feel that everything we do is fully compliant,” Mashinsky said. “When you touch people’s money, especially when they’re retail customers, you have a very high responsibility, and most people in crypto were behaving like they weren’t governed by these rules. Now that the hammer came down, the nails that were sticking out the most — as far as being not compliant — are the ones that are getting hammered,” he said. 

This story was updated on October 12, 2021, at 1:58 pm ET.

  • Jacquelyn Melinek is a Houston-based reporter covering digital asset funds and markets. She previously reported on energy markets for S&P Global Platts and Bloomberg News and is published in over 65 news outlets. She graduated from the University of North Carolina at Chapel Hill with a degree in Media and Journalism.