MONTREAL — Earlier this year, Rod Bolger, a veteran banking executive who had most recently been RBC’s chief financial officer, left the highly regulated world of Canadian banking for a new challenge: Celsius, a cryptocurrency-lending startup operating in vastly less certain territory.

Now, the banker is a key executive at the centre of one of crypto’s most high-profile meltdowns. Amid a steep drop in crypto prices, New Jersey-based Celsius said earlier this month it was suspending withdrawals of customer funds in order to meet its obligations to depositors and other creditors. As the company’s CFO, Bolger is tasked with steering it through the turbulence, which could include a sale or financial restructuring—and will likely be one of the biggest challenges of the executive’s career.

Bolger’s move in February might have seemed unlikely for someone who had spent the previous two decades working in senior roles at some of the world’s largest financial institutions. He worked at Bank of America and Citigroup before joining RBC, where he spent 10 years, including five as CFO. At Celsius, he works under a CEO who is open about his contempt for the legacy financial system, wearing T-shirts emblazoned with slogans like “Banks are not your friends.” 

The pivot was all the more surprising given Bolger’s own past comments about the crypto sector. In a 2018 interview while he was still at RBC, the banker raised concerns about the lack of safeguards in the industry and said it needed more oversight to ensure Bitcoin wasn’t being used for terrorist financing. 

“All the banks are spending a lot of money to help make the world a safer place, and we don’t want there to be shadow financial systems that make the world a less safe place,” he told BNN Bloomberg.

As it turned out, Celsius was a key player in the shadow financial system that developed as crypto prices reached new heights and investors flocked to the asset class in search of high returns. Although its business model had raised regulators’ eyebrows—by the time Bolger joined, the U.S. Securities and Exchange Commission and officials in at least five states had scrutinized its practices—the company drew backing from institutional investors like the Caisse de dépôt et placement du Québec, which put US$150 million, according to Radio-Canada, into Celsius in a funding round that it co-led last fall. 

It also attracted billions of dollars worth of crypto deposits from investors of all stripes. Pitching potential clients on a “new economy” enabled by cryptocurrencies, the startup offered yields as high as 17 per cent in exchange for lending out those deposits. As of May, Celsius said it had US$11.8 billion in assets and 1.7 million users.

As CFO, Bolger had been a key figure in Celsius’s outward communications during the recent market rout. Right up until the company’s troubles became public, he was reassuring investors about the platform’s strength. In a video posted to Celsius’s YouTube channel on June 10, Bolger struck a confident note, praising the experience of the company’s leaders and its approach to managing risk. The rout in crypto markets over the last few months was nothing out of the ordinary, he said.

“This is actually quite normal for these markets, and happens every so often. They call it a crypto winter,” Bolger said. “I live in Canada right now. Canada can be cold, and so can these crypto markets. But we know how to weather the storm and get through that, and we built ourselves so that we can basically stand the test of time.”

Two days later, the company said it was suspending withdrawals and transfers of customer funds, citing extreme market conditions. Customers, who might not have been aware that Celsius considered them unsecured creditors, suddenly lost all access. The company became a symbol of the potential dangers for ordinary investors participating in the emerging sector. 

“We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations,” the company said in a June 12 statement on its website. Neither Bolger nor Celsius responded to The Logic’s interview requests.

Celsius has since tapped lawyers and advisors to prepare for a potential bankruptcy, according to The Wall Street Journal. 

Major investors including the Caisse and WestCap Group, a San Francisco-based growth-equity firm, don’t intend to provide the company with more capital, The Journal reported. A spokesperson for the Caisse declined to comment to The Logic.

Still, Bolger’s experience leading one of Canada’s largest banks could give Celsius customers some hope that there will be assets left over to pay them back, said Matthew Burgoyne, a lawyer at Osler, Hoskin and Harcourt who co-heads the firm’s digital-asset practice.

“There’s a chance that Celsius, with a CFO who’s worked at a Canadian bank, will be in a better financial position at the beginning of the insolvency, versus another company with a less experienced CFO,” Burgoyne said.