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I hate to be the guy who keeps saying I called it, but for a long time, I’ve had a funny feeling about the Celsius Network Ltd., the New Jersey company that shut down services abruptly on June 12 and sparked the recent cryptocurrency crash. And I can prove it.

Caisse de dépot et placement du Québec, Canada’s second-largest pension fund, is an investor in Celsius, and I’d asked the fund about its investment just a little before the company’s no good, very bad day.

On June 3, the Caisse told me: “All of our investments are subject to a rigorous analysis process … As a long-term investor, our investment decisions are based on long-term value creation and not on short-term fluctuations … Celsius is a fast-growing company in a nascent sector.”

This past Monday, after a crisis at Celsius and more than a 50-per-cent drop in the crypto markets, I reached out to the Caisse again. Does the pension fund still stand by what it’d said earlier? I asked. Would the Caisse still have invested in Celsius if it’d known this was going to happen?

“We don’t have anything new to share on this file,” a spokesperson responded.

Fair enough. While the Caisse didn’t make public how much it had invested in Celsius back in October, 2021, Radio-Canada put it at $150-million. If I’d thrown $150-million at Celsius, I wouldn’t have much to say either.

But while it might look like a lot of egg on the Caisse’s face, the truth is more complicated. The pension fund’s bet on Celsius is an interesting case study for retail investors, particularly conservative types: In cryptoland, you can make all the seemingly right decisions and still end up losing.

Celsius is a bit of a crypto bank. It charges interest when lending out crypto, and people can deposit crypto and earn their own interest. Its founder, Alex Mashinsky, is a noted entrepreneur who’s started several billion-dollar unicorn companies.

But amid falling prices, Celsius got hit by a bank run – when everyone is trying to withdraw their money, and the institution realizes it does not have enough on hand. On June 12, Celsius said it would halt withdrawals indefinitely. Then Celsius quietly hired a law firm that specializes in bankruptcy.

Meanwhile, Celsius and Mr. Mashinsky cancelled all manner of public appearances, including those at this week’s Collision conference in Toronto, and put out only a handful of measly tweets and blog posts. (Its hiring of bankruptcy lawyers was made known through confidential sources in the media.)

When the Japanese exchange Mt. Gox collapsed in 2013, chief executive Mark Karpelès at least had the decency to hold a news conference and, in the local fashion, bow deeply to express shame and regret for his rank ineptitude.

Maybe Celsius’s problems will one day be resolved, but its users will forever remember how they were treated like schmoes. The Celsius brand is forever tainted.

Objectively speaking, it’s quite apparent now that investing in Celsius hasn’t been good for the Caisse.

Compare the Caisse’s investment in Celsius with the crypto bet of the Ontario Teachers’ Pension Plan, another large institutional investor. Teachers had invested in the Bahamas-based crypto exchange platform FTX Trading Ltd., and FTX has been doing surprisingly well amid the downturn, buying up and bailing out all manner of other crypto firms.

There is an obvious distinction between Celsius and FTX. But the real difference boils down to a quality hard to discern in the raging bull market of last year: how founders handle crises and pressure. The Caisse and Teachers both essentially rolled the dice, and their positions today could easily be swapped. One was simply unlucky.

It’s how venture capital is sometimes. And that is especially so for venture capital put into crypto, where even the investments available to retail investors carry a lot of the risks of investing in startups – because of how fluid, borderless and interdependent the ecosystem is, and the extremely low barriers to entry for project proponents.

An everyday crypto investor may not be able to put money in Celsius or FTX directly, but they are essentially taking on venture capital risk no matter what coin, company or fund they buy.

Ultimately, for anyone who has that crypto itch, but is turned off by the volatility, at least a part of the Caisse’s move might even be worthy of emulation.

Most of the Caisses’s $420-billion worth of assets under management are boring and stable. The $150-million it threw at a high-risk, high-reward bet is less than a tenth of 1 per cent of its funds.

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