The U.S. Securities and Exchange Commission (SEC) has objected to cryptocurrency company Celsius Network's proposed plan to distribute digital assets to its customers through Coinbase as part of its restructuring plan.
Celsius Network, which filed for bankruptcy more than a year ago, is awaiting approval from the bankruptcy court for its restructuring plan in the coming weeks.
Under the proposed plan, Coinbase will provide brokerage and primary trading services to Celsius. These are the same activities that prompted the regulator's lawsuit, which is still ongoing, according to court documents filed by the SEC on Friday in Celsius' Chapter 11 lawsuit. The SEC previously sued Coinbase earlier this year, claiming it operated an unregistered securities exchange.
Celsius plans to use Coinbase to distribute cryptocurrencies to its international customers and is seeking court approval for a series of agreements with the exchange.
But the SEC expressed concern in its filing on Friday, stating that “Coinbase Deals go well beyond the services of a distribution agent, envisioning brokerage and principal trading services that embody many of the concerns raised in the SEC's District Court case against Coinbase.”
Coinbase Chief Legal Officer Paul Grewal responded to these concerns on Monday, saying:
“Coinbase is proud to work with Celsius to distribute cryptocurrencies to its customers. Why would the SEC object to a trusted US public company taking on this role?”
Celsius filed for bankruptcy last year and owes billions of dollars to investors. In July, the SEC filed charges against Celsius and its former CEO, Alex Mashinsky, for allegedly raising billions through fraudulent and unregistered sales of “cryptoasset securities,” repeatedly lied to investors about Celsius' financial health, and manipulated the price of CEL, the company's native token. He filed a lawsuit.
*This is not investment advice.
