SEC Opposes Celsius Network’s Proposal to Involve Coinbase in Bankruptcy Plan
The United States Securities and Exchange Commission (SEC) has objected to the inclusion of Coinbase in Celsius Network’s bankruptcy and reorganization plan. Celsius had previously announced its intention to use Coinbase to distribute digital assets to its international customers, but the SEC has raised concerns about this arrangement.
In a court filing, the SEC stated that the Coinbase Prime Broker Agreement goes beyond the role of a distribution agent and includes brokerage and master trading services. This raises issues similar to those in the SEC’s ongoing lawsuit against Coinbase for operating as an unregistered securities exchange.
The SEC also pointed out that there is an undisclosed agreement between Celsius and Coinbase that should be presented to the court. The SEC has requested full disclosure of the details of their arrangement and the preparation of a new agreement.
SEC’s Case Against Celsius and Former CEO
Celsius filed for bankruptcy in July 2022, and in July 2023, the SEC accused the company and its former CEO, Alex Mashinsky, of violating securities registration and anti-fraud laws. The SEC alleged that Celsius conducted fraudulent and unregistered sales of crypto asset securities, made false statements to investors, and manipulated the price of its native token, CEL.
Celsius has been working on a restructuring plan since March, with multiple revisions. However, legal challenges persist. In August, the bankruptcy court approved Celsius’s request to send digital ballots to creditors for voting on the restructuring plan. The next hearing in the bankruptcy case is scheduled for October 5th.
Hot Take: SEC Raises Concerns Over Celsius-Coinbase Partnership
The SEC’s objection to Celsius Network’s proposal involving Coinbase adds another layer of complexity to both companies’ legal battles. While Celsius seeks to use Coinbase for asset distribution, the SEC believes this agreement extends beyond the role of a distribution agent and could potentially lead to further legal disputes. This objection highlights the ongoing scrutiny faced by crypto firms in navigating regulatory frameworks. The outcome of this case will have implications for the broader crypto industry and its interactions with traditional financial institutions.
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