Crypto lender Celsius bags US$400M despite regulatory heat

In spite of ongoing regulatory issues, cryptocurrency lender Celsius Network has raised US$400 million in an investment round pegging the valuation of the company at US$3 billion.

Fast facts

• The funding was led by U.S. growth equity firm WestCap and Caisse de dépôt et placement du Québec (CDPQ), a global investment group. 

• Celsius will use the funds to continue expanding its products and offerings, as well as building bridges between traditional finance and cryptocurrencies, specifically focusing on launching institutional-grade products. Part of the proceeds will also be used to double its team from 486 employees to nearly 1,000 and expand globally through strategic acquisitions, the press release said.

• Over the past few months, Celsius has been receiving increasing attention from regulators. In June, Celsius announced that it will move its main operations and regional headquarters to the U.S. due to regulatory uncertainty in the U.K. But shortly after its move, U.S. crypto regulators began tightening the screws by scrutinizing lending-product providers like Celsius and Blockfi. U.S. states last month accused Celsius of offering unregistered securities. Texas issued a court date to decide whether it should ask Celsius to stop its services in the state, while Alabama asked Celsius to explain why its services should not be stopped within 28 days. Shortly after, New Jersey asked Celsius to cease certain services. Coinbase, the largest crypto exchange in the U.S., also announced last month that it dropped its plans for a lending product, disclosing that the U.S. Securities and Exchange Commission notified it of its intention to sue if it proceeded.

• But despite all the regulatory heat, Celsius has been growing at a rapid pace. The company, which offers yield on crypto tokens, said in August that it had grown by over 1,900% in the preceding 12 months. As of October 8 Celsius’ total assets crossed US$25 billion while the company claimed to have over 1 million registered customers. Celsius also said it has paid more than US$850 million in interest to users through its Earn product in just over three years.

• WestCap founder and managing partner Laurence Tosi expressed confidence in Celsius’ prospects. “While the current regulatory attention is new, Alex Mashinsky [CEO of Celsius] and Celsius’ ethos has long echoed the sentiment regulators are trying to put forth in terms of consumer protections. Celsius is committed to working constructively with regulators to better understand the dynamic crypto space, protect retail customers from fraud and undue risk, and create general consumer knowledge to allow for thoughtful investment decisions,” he stated.