In the wake of the Caisse de dépôt et placement du Québec (or the CDPQ, the federal Quebec pension fund) writing off its $150 million investment into the now bankrupt Celsius Network, the main question on the tip of everyone’s tongue is, “How did such a large institutional entity get duped by such an obvious lending scheme?”
The answer may be more apparent than anyone thought: It could very well be that personal acquaintances precipitated a major investment without extra due diligence from a fund that has over ~$300 billion in assets under management (AUM).
An investment from the past
Back in December 2021, a substack writer going by “rorodi” pointed to a connection between Thomas Birch of the CDPQ and Alex Mashinsky, CEO and founder of Celsius, dating back roughly two decades.
At the time of the article, as cryptocurrencies continued in a general upward trajectory and Mashinsky appeared on numerous podcasts, nothing seemed particularly unsavory about the investment from the CDPQ. But with Celsius now struggling to work through bankruptcy court, the investment from an enormous pension fund and a source of confidence for investors in Celsius perhaps needs to be viewed through a different lens.
Who is Thomas Birch?
So, who exactly is Thomas Birch and why does it matter? According to the CDPQ profile of Birch, he “has been Managing Director, Global Venture Capital and Technology, since 2015. In this role, he co-leads CDPQ’s technology and venture capital investment activities within the Private Equity team,” which likely means that his team, or part of his team, bears responsibility for the investment in Celsius (Protos reached out to the CDPQ, as of press time they have not responded).
The CDPQ did tell the Financial Times that the “teams will be accountable, as they always are.”
Unfortunately for Birch, his profile goes into much further detail about his past — specifically a company called GoodContacts, for which he claims to have been CEO. There’s little information about GoodContacts to be found online other than the fact that it was acquired by a company called MyLife in 2004.
But what is discoverable online is a very clear connection between GoodContacts and Alex Mashinsky.
Enter Governing Dynamics
Governing Dynamics is a “New York-based early-stage venture firm” that lists Alex Mashinsky as founder and Managing Director. The most important part of the Governing Dynamics website, however, is that under “Prior Investments” they list a little-known company at the very bottom of the page: GoodContacts.
It does appear that Alex Mashinsky, CEO and founder of Celsius, therefore, invested in a company that Thomas Birch, who leads tech private equity investing at CDPQ, was running.
The CDPQ denies a conflict
In an article by Le Journal de Montreal, the communications director for the CDPQ, Kate Monfette, stated that, “there was no real or apparent conflict of interest,” and insisted that the CDPQ has a code of ethical practices that borders on “the most rigorous of comparable institutions,” (our emphasis).
It was also clarified that Birch and Mashinsky, “never worked together and do not have a personal relationship.” No further details on GoodContacts and the connection between Birch and Mashinsky were mentioned.
No conflict, no crime
If there is truly no reason to suspect intrapersonal conflicts of interest in the expensive write-off for the massive pension fund, there are still questions about the CDPQ’s due diligence process.
Mashinsky’s personal website claims he is responsible for roughly 3.9 billion people communicating for free due to his patent for VoIP, states he invented yield on the blockchain, and is riddled with spelling errors. Celsius Network was offering 17% yields only one month after the $150 million was essentially donated from the CDPQ.
It’s feasible that Celsius presented false financial information to the CDPQ, WestCap, and other large institutional investors, but this again leaves the public wondering how these players got burned so easily and whether they intend to present any evidence to suggest as much publicly.