Crypto lending firm Celsius Network acquired $400 million in a new equity funding round amid United States regulators largely cracking down on cryptocurrency lending operations. While announcing the news on October 12, Celsius said that the latest funding was led by Canada’s second-biggest pension fund, Caisse de dépôt et placement du Québec (CDPQ), together with WestCap, which is an equity company established by the former Airbnb executive Laurence Tosi.
The company now intends to use the funds from the latest investment to continue growing its products and offering platform, focusing mainly on institutional-grade products. Celsius aims to double its team of employees from 486 to almost 1,000 and increase its reach globally through multiple strategic acquisitions.
Celsius CEO Alex Mashinsky is hopeful that the new fundraising will enable the sector to reassure regulators and other authorities about the stability and potential of his cryptocurrency lending business. This move will eventually enable him to expand the business across mainstream financial markets. Mashinsky said in an interview with the Financial Times on October 12:
“It’s not $400 million. It’s the credibility that comes with the people who wrote those cheques. With more than $25 billion in assets and over $850 million in yield paid to over 1.1 million users Celsius has distributed 10x more yield for the crypto community than any other lender.”
The latest funding round puts the valuation of Celsius at more than $3 billion. This marks a major increase from a $10million equity funding round in 2020 that pushed the company’s post-money valuation to $150 million.
Previously, Blockchain fund Alpha Sigma Capital evaluated Celsius’ valuation in March 2021, stating that the company had an implied value of around $3.13 billion. This was three times bigger than its market cap at the time.
Launched in 2017 in London, the Celsius Network is a considerable cryptocurrency lending platform, enabling users to earn some interest in holding digital assets like bitcoin. The firm has now emerged as one of the largest operators in decentralized finance (DeFi), reporting digital asset holdings of over $20 billion in late August.
Originally operating in the UK, Celsius officially confirmed in June that the firm will be moving its headquarters from the United Kingdom to the US and “where applicable, to several other jurisdictions.”
The cryptocurrency lending company eventually encountered multiple warnings from many US regulators, with the Texas State Securities Board and New Jersey Bureau of Securities insisting in September that Celsius had supposedly violated the local securities laws.
Other US states like Alabama and Kentucky allegedly issued similar warnings, while the firm said that it was offering services in full compliance with the United States laws.
Celsius’ issues with the United States authorities come amid a widespread crackdown on cryptocurrency lending in the nation. In July 2021, the New Jersey Bureau of Securities imposed a cease and desist order to BlockFi, a major crypto lender, resulting in a wave of similar orders in many other states.
The biggest cryptocurrency exchange in the US, Coinbase, had to suspend its crypto lending product Lend after the Securities and Exchange Commission threatened the company with legal action.