The U.S. Securities and Exchange Commission (SEC) has objected to part of a reorganization plan proposed by bankrupt crypto firm Celsius. The plan would have Coinbase act as a distribution agent to return funds to former users affected by Celsius’ collapse.
The SEC argues that the role Coinbase is expected to play surpasses the typical duties of a distribution agent. The regulator also highlighted inconsistencies in Celsius’ filings, noting that the company has stated that it does not intend for Coinbase to provide brokerage services, but its agreement with Coinbase suggests that such services will in fact be provided.
The SEC also believes that Celsius and Coinbase have an additional agreement that they intend to file under seal. The regulator argued that, if there is a new agreement, that agreement should be provided to it and to the court. The SEC added that some trading services described within the agreement are related to various concerns that it raised in its June 6 lawsuit against Coinbase.
Coinbase’s chief legal officer, Paul Grewal, has responded to the SEC’s objection, stating that Coinbase is “proud to engage with Celsius to distribute crypto back to its customers.” He also questioned why the SEC is opposed to the distribution plan and said that his firm will address the matter within Celsius’ bankruptcy proceedings. The SEC also has concerns about Celsius’ CEL token. In July, the SEC filed a securities fraud case against Celsius and its former CEO, Alex Mashinsky, alleging that they offered and sold the CEL token in unregistered and fraudulent security offerings.
In its latest objection to Celsius’ bankruptcy plan, the SEC has asked the court to rule on whether CEL is a security. The regulator also asked for the effects of this ruling to be limited to the dispute over Celsius’ distribution plan. The SEC said that any broader ruling could “impede and jeopardize” its separate securities case against Celsius.
The SEC’s objection to Celsius’ bankruptcy plan could complicate the company’s efforts to reorganize and repay its creditors. It remains to be seen how the court will rule on the SEC’s objections and whether Celsius will be able to reach an agreement with the regulator.