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Quebec pension manager and WestCap invest $400-million in cryptocurrency lending platform – The Globe and Mail

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The Caisse de dépôt et placement du Québec has made its inaugural investment in a cryptocurrency company, even amidst growing scrutiny of the digital-asset world from global regulators.

The Caisse, which is Canada’s second-largest pension fund manager, announced Tuesday that it is participating in a US$400-million funding round for New Jersey-based cryptocurrency lending platform Celsius Network. Investing alongside the Caisse is San Francisco-based WestCap Group, a private equity firm set up by former Airbnb executive Laurence Tosi.

Celsius’s core business is facilitating the lending of cryptocurrency to retail and institutional investors. Users deposit cryptocurrency using the Celsius app, and the company then lends the funds out to borrowers for yields as high as 17 per cent.

How to invest in cryptocurrency without buying any

“The way we look at Celsius is that it is the bank of the future. They offer lending and deposit services, not just to retail investors but to institutions as well. Plus we really liked the management team and the expertise they offered in the cryptocurrency world,” Alexandre Synnett, executive vice-president and chief technology officer at the Caisse, said in an interview.

The investment values Celsius at more than US$3-billion, a significant jump in the company’s valuation from its previous funding round last June. At that time, the company was worth about US$120-million. The controversial cryptocurrency company Tether International – which issues the stablecoin Tether, and whose executives are being probed by the United States Department of Justice over allegations of bank fraud – was the lead investor in Celsius’s first equity raise.

In a statement announcing the latest financing, Celsius said it would use the funds to double its team from 486 to 1,000 employees, and to expand globally. The company has processed US$8.2-billion in loans and says it has one million users registered on its platform.

Crypto lending has come under heavy pressure from U.S. regulators, who say the services do not comply with securities laws. Last month, the U.S. Securities and Exchange Commission blocked crypto exchange giant Coinbase from offering a new crypto lending product that would have allowed users to earn interest on holdings of a stablecoin called USDC. (A stablecoin is a type of cryptocurrency that is backed by an underlying asset, such as the U.S. dollar, to prevent wild price fluctuations.)

Celsius Network, too, has been targeted by U.S. regulators. Texas and New Jersey recently accused the company of offering residents unregistered securities. The states argue that Celsius markets its products as alternatives to bank savings accounts, and therefore should be registered with regulators for proper oversight.

Celsius used to be based in the United Kingdom, but moved its operations to the U.S. after the U.K.’s Financial Conduct Authority imposed rules that required all crypto asset companies to be registered with it.

Mr. Synnett said that the Caisse is aware of the regulatory pressure on crypto lending companies. But, he said, the pension manager believes blockchain and crypto technology is here to stay, and that the industry needs to be regulated in the right way.

“We made this investment from the perspective that this technology is not going away,” he said. “We are going to keep looking at companies in this space. It’s a good way to diversify ourselves and position ourselves as global investors in the digital asset industry.”

Canadian pension funds have largely appeared to stay clear of major investments in crypto companies, which makes the Caisse’s sizable investment in Celsius an anomaly. The Ontario Municipal Employees Retirement System pension fund (OMERS) has a stake in Purpose Investments, which launched a Bitcoin ETF earlier this year. Its venture capital arm, OMERS Ventures, had previously invested in three other crypto companies – Digital Currency Group, Citizen Hex and OB1 – but has since exited those investments.

With a report from David Milstead

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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