SEC Raises Concerns Over Coinbase in Objection to Celsius Restructuring Plan – The United States Securities and Exchange Commission (SEC) has registered its protest against Celsius Network’s restructuring plan, citing its ongoing lawsuit with crypto exchange Coinbase as a factor. In a submission dated September 22 in the U.S. Bankruptcy Court for the Southern District of New York, the SEC expressed a limited objection and reserved its rights regarding Celsius’ latest proposed reorganization plan.
This marks the fourth iteration of the bankruptcy plan, initially proposed in March but still pending approval. A supplementary component of the reorganization plan suggested a distribution services agreement with Coinbase, which Celsius intended to keep confidential. The SEC’s objection suggests that this agreement might require Coinbase to offer services that extend beyond those of a typical distribution agent, potentially involving services related to the SEC’s civil lawsuit filed in June.
People Also Read: Crypto Payment Firm Alchemy Pay Wins Money Transmitter License in US
“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,” said the filing. “However, this Court should not be asked to approve a deal where the material terms are missing or inconsistent.”
Revisions to the Celsius restructuring plan have been ongoing since March, while Coinbase faces an SEC lawsuit over allegedly offering unregistered securities. In a Sept. 25 X, Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal said the exchange was “proud to engage with Celsius” in its efforts to return user funds.
The submission to the bankruptcy court came after Celsius Network revealed a significant development – a contractual agreement with Core Scientific. In this arrangement, Core Scientific, a mining company, consented to sell a mining data center to Celsius Network in exchange for a sum of $14 million in cash. This deal also encompassed the resolution of all existing legal disputes between the two companies.
Regrettably, Core Scientific asserted that Celsius had been in breach of its payment obligations following its declaration of bankruptcy in July 2022. This added complexity to Celsius’ financial situation and the ongoing bankruptcy proceedings. In the subsequent month, namely August, the bankruptcy court granted Celsius permission to distribute digital ballots for a vote on the proposed restructuring plan, which is scheduled for October.
People Also Read: Binance and CEO Changpeng Zhao ask Court to Dismiss SEC Suit
This move indicates a crucial step in the bankruptcy process, allowing stakeholders to have a say in the company’s future direction. The upcoming milestone in the bankruptcy case is the next hearing, set to take place on October 5th, where further deliberations and decisions will be made regarding Celsius Network’s financial rehabilitation.