The U.S. Securities and Exchange Commission (SEC) is opposed to Coinbase’s current involvement in Celsius’ bankruptcy plan.
Celsius, a crypto lender, originally filed for bankruptcy in July 2022 after its native asset plummeted by over 99% and it was unable to fulfill customer withdrawals.
The bankrupt lender’s most recent Chapter 11 plan entails using Coinbase as an agent to distribute crypto back to its former customers.
The SEC, however, submitted a filing last week raising concerns about that choice of distribution agent.
Argue the regulator’s lawyers,
“The Coinbase Agreements go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns raised in the SEC’s District Court action against Coinbase…
There appears to be an additional agreement with Coinbase, which the Debtors seek to file under seal, but it has not been made available to the SEC staff.
The Debtors have confirmed that they do not intend for Coinbase to provide brokerage services to the Debtors, despite the language in the Coinbase Agreements to the contrary. However, this Court should not be asked to approve a deal where the material terms are missing or inconsistent.”
The SEC sued Coinbase in June, accusing the company of operating as an unregistered securities exchange, broker and clearing agency.
On Monday, Paul Grewal, Coinbase’s chief legal officer, questioned the regulator’s opposition to his company’s involvement in Celsius’ bankruptcy plan.
“Coinbase is proud to engage with Celsius to distribute crypto back to its customers. I wonder, why would the SEC object to a trusted US public company taking on this role? We look forward to addressing this with the bankruptcy court and undertaking our important role to make Celsius customers whole.”
Former Celsius CEO Alex Mashinsky and Roni Cohen-Pavon, the company’s former chief revenue officer, were both arrested in July.
The former executives were slapped with a variety of criminal and civil charges from the SEC, the Federal Trade Commission (FTC), the Department of Justice (DOJ) and the Commodities Futures Trading Commission (CFTC).
The FTC specifically accused Mashinsky of “tricking consumers into transferring cryptocurrency onto the platform by falsely promising that deposits would be safe and always available.”
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