• CDPQ invested in the crypto lender but has “absolutely” no plan to allocate directly in BTC or digital assets.
  • Celsius manages $25 billion in assets, adding $15 billion in just seven months.
  • The firm is facing several warnings from regulators of Texas, New Jersey, Kentucky, and Alabama for allegedly violated local securities laws.

Crypto lending platform Celsius Network has raised $400 million in an equity funding round at a valuation of $3 billion while being subjected to increased scrutiny from the US state regulators.

The funding round was led by Canada’s second-largest pension fund Caisse de dépôt et placement du Québec (CDPQ) which has $300 billion in assets and equity firm WestCap, founded by a former Airbnb executive Laurence Tosi.

Celsius Network intends to use the fresh capital to expand its offerings with a focus on institutional-grade products, expand globally through strategic acquisitions, and double its headcount to nearly 1,000.

How Will Celsius’ Latest Funding Help it Tackle the Regulatory Pressure?

CEO Alex Mashinsky told the Financial Times that he also hopes the new fundraising would help reassure the regulators and attract mainstream financial markets. “It’s not $400 million. It’s the credibility that comes with the people who wrote those cheques,” he said.

Alexandre Synnett, executive vice-president and CTO at CDPQ, said he expected that taking a stake in Celsius despite the regulatory pressure would bring questions but added that they carefully considered it as part of their due diligence and are willing to “work collaboratively with regulators, including in the US.”

Moreover, this is about “the conviction” that the pension fund has around blockchain technology, Synnett told FT. “In a positive way, I think it will change the way the financial services are interacting.”

Regulatory Pressure on Celsius Network

Celsius, much like BlockFi, has been seeing pushback from state regulators in Texas, New Jersey, Kentucky, and Alabama for its lending products who allege that the company’s interest earnings accounts violate securities laws.

Coinbase, the largest crypto exchange in the US, also had to abandon its product Lend after the Securities and Exchange Commission threatened it with legal action. Celsius, however, maintains that its services are in full compliance with U.S. laws.

This move reflects CDPQ’s inaugural investment in the crypto sector. But Synnett said the fund is only focused on making “opportunistic” investments in “diamond in the rough” early-stage companies.

“This is a small diversification play,” he said, adding the fund is not going to go all out on cryptocurrencies and they “absolutely” do not plan to allocate funds directly into Bitcoin or other crypto assets.

Last year, Celsius raised $30 million led by Tether at a pre-funding valuation of $120 million. The crypto lender currently manages $25 billion in assets, up from $10 billion in March.

Founded in 2017, the firm has also paid over $850 million in yield to its more than 1 million registered users.