The United Kingdom – Celsius Network, a UK-based cryptocurrency lender, has been under U.S. regulators’ scrutiny in states like Alabama, Texas, Kentucky, and New Jersey for its high interest-bearing accounts.
Despite this legislative resistance, Caisse de dépôt et placement du Québec (CDPQ) and WestCap have invested $400 million in Celsius Network. For those who don’t know, this is the biggest funding round for Celsius Network.
Backing from such major investors is expected to reassure regulators about the credibility of Celsius Network.
Alex Mashinsky, the CEO of Celsius Network, said that it’s not only about the capital. With such massive investment comes the credibility of the people that sign those cheques.
Celsius is Now Valued at over $3 Billion
On October 12, 2021, the Celsius Network raised $400 million from Canada’s second-largest pension fund – CDPQ and equality firm WestCap. Celsius Network intends to use these funds to expand its institutional cryptocurrency products and service offerings and double its global workforce to nearly 1,000 employees.
With this recent investment, Celsius Network’s total funding reaches $493.8 million, taking the company’s valuation to over $3 billion.
Celsius has grown rapidly since 2020 as there was a massive demand for crypto lending and yielding strategies amongst customers. The total assets on their platform grew from $10 billion in March to $25 billion in October. Moreover, Celsius Network has distributed over $850 million in yields to over 1.1 million users on their platform. This is 10x more yield than any other lender.
Above all, Celsius Network’s recent funding round indicates that their investors remain confident about this cryptocurrency lender, in spite of the legal scrutiny it faces in the U.S.
Is Legislative Resistance Against Celsius Normal?
After Celsius Network moved its base to the United States, its regulatory concerns are only increasing.
The New Jersey Bureau of Securities filed a cease-to-desist order against Celsius Network on September 17, 2021. They ordered it to stop its high-interest accounts in New Jersey by the end of October. On the same day, Texas securities regulators summoned Celsius Network for a court hearing on February 14, 2022.
Shortly after Alabama, New Jersey, and Texas raised concerns about Celsius Network, the Kentucky Department of Financial Institutions also issued a cease-and-desist order against Celsius Network’s ‘Earn Interest Accounts.’
Essentially, regulators are concerned with Celsius Network’s interest accounts that offer high-interest rates when compared to traditional banks.
Despite these regulatory concerns, investors remain bullish about Celsius Network. Laurence Tosi, the WestCap executive who led Celsius Network’s recent funding round, said that it is normal for regulators to scrutinize market leaders like Celsius Network as they are clarifying their own rules. He further said that examining crypto companies is a part of regulating a new market.
Alex Mashinsky, the CEO of Celsius Network, also dismissed the charges and said that it does not use customers’ deposits to buy more assets or sell them in any circumstances. He added that Celsius Network’s business model is to earn yield for our customers and does not involve trading their assets.
Celsius Network’s is facing regulatory scrutiny after it relocated to the United States. Regulatory authorities are majorly concerned about its high yield-bearing accounts.
Nonetheless, the investors stand in support of Celsius Network, pumping $400 million into the company. They believe legislative scrutiny exists as cryptocurrency is a comparatively new space that operates differently from traditional markets.