Canadian pension giant writes down Celsius stake, saying it went into crypto 'too soon'

Canada's second-largest pension fund manager has written down its $150 million investment in crypto lending platform Celsius Network, admitting it got into crypto "too early."

Charles Emond, chief executive of the Caisse de dépôt et placement du Québec (CDPQ), said his investment in Celsius last October marked the end of his foray into the digital asset industry.

Celsius became one of the biggest names caught up in the sharp fall in digital asset prices in the spring. In June, it froze customer withdrawals and weeks later filed for Chapter 11 bankruptcy protection in New York, a move that exposed a $1.2 billion hole in the company's balance sheet.

CDPQ, the $304 billion investment firm that manages pension plans and insurance programs in Quebec, said Wednesday that its stake in Celsius had been written down "out of an abundance of caution."

“It is clear to us when we look at all of this, even if the final chapter has not yet been written, that we entered too early into an industry that was in transition, with a company that had to manage extremely rapid growth,” Emond said.

The group's comments on Wednesday mark a sharp contrast from October, when it said its investment in Celsius was a sign of its "belief" in blockchain technology.

The writedown of the group's Celsius holdings - a small portion of its overall portfolio - came as the fund manager reported a C$28 billion ($22 billion) decline in assets in the six months to the end of June this year. CDPQ said its portfolio was hit by a "rare and simultaneous" decline in both stock and bond markets, resulting in a 7.9 percent loss in its portfolio.

“The first six months of the year were very challenging,” Emond said, adding that his portfolio still outperformed its benchmark, which fell 10.5 percent.

For the first time since Celsius's slide into bankruptcy, Emond said publicly: "Whether it is Celsius or any other investment, needless to say, if we write it off, we will be disappointed and not happy with the outcome."

Emond said he was aware there were challenges regarding crypto investments, but “perhaps we underestimated the challenges.”

He expressed “great empathy” for Celsius investors and said the fund manager “reserves our comments and is exploring our legal options” regarding the situation.

Asked if he regretted investing in Celsius, Emond said: "As an investor, it is a constant and never-ending learning process. You learn and make sure you don't repeat the mistake." He added that the company “does not take any dollar loss lightly.”

Emond declined to go into detail about the internal impact of the investment. However, he added that “teams will be accountable as always.”

He also confirmed that CDPQ is not interested in further investing in crypto, but said that the pension fund manager is still optimistic about the future of blockchain technology. "The clear answer would be yes. . . You know, there are ups and downs with these disruptive technologies."

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