SEC Questions Coinbase’s Involvement in Celsius’ Bankruptcy Plan
The U.S. Securities and Exchange Commission (SEC) is raising concerns about Coinbase’s participation in Celsius’ bankruptcy plan. Celsius, a crypto lender, filed for bankruptcy in July 2022 due to a drastic drop in its native asset value and the inability to fulfill customer withdrawals. The proposed Chapter 11 plan involves using Coinbase as an agent to distribute crypto back to former customers. However, the SEC has filed a document expressing worries about this choice of distribution agent.
The SEC argues that the agreements between Celsius and Coinbase extend beyond the scope of a distribution agent’s services, potentially involving brokerage and master trading services that align with the concerns raised in the SEC’s legal action against Coinbase. The regulator also highlights an undisclosed agreement between the two parties, which raises questions about missing or inconsistent material terms.
Coinbase Responds to SEC’s Objection
Coinbase’s chief legal officer, Paul Grewal, questions the SEC’s objection to his company’s involvement in Celsius’ bankruptcy plan. He wonders why the SEC opposes a trusted U.S. public company taking on this role and looks forward to addressing this matter with the bankruptcy court.
Former Celsius Executives Face Legal Troubles
In July, former Celsius CEO Alex Mashinsky and Chief Revenue Officer Roni Cohen-Pavon were arrested following criminal and civil charges from multiple regulatory bodies, including the SEC, FTC, DOJ, and CFTC. The FTC specifically accused Mashinsky of deceiving consumers by falsely promising the safety and availability of deposits on the platform.
Hot Take: Regulatory Scrutiny Surrounding Coinbase Continues
The SEC’s skepticism regarding Coinbase’s involvement in Celsius’ bankruptcy process further highlights the ongoing regulatory challenges faced by the cryptocurrency exchange. While Coinbase defends its role, the SEC’s concerns suggest a need for clarification and transparency in the agreement between Celsius and Coinbase. As regulatory scrutiny intensifies, it remains to be seen how this situation will unfold and whether it will impact the broader crypto industry.
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