Tensions Escalate Between Coinbase and SEC as Regulator Expresses New Worries Regarding Crypto Exchange’s Involvement in Celsius Network’s Bankruptcy Strategy
On Monday, the friction between Coinbase and the Securities and Exchange Commission (SEC) intensified, as the regulatory body voiced fresh apprehensions about the crypto exchange’s participation in the bankruptcy plan of Celsius Network.
Celsius Network’s strategy involves utilizing Coinbase as a means to distribute cryptocurrencies to international customers and is seeking court approval for a series of agreements with the exchange, as stated in an SEC filing from last Friday.
However, the SEC expressed reservations about the extent of the Coinbase Agreements, contending that they encompass more than just distribution agent services. Instead, they seem to involve brokerage services and master trading services, raising concerns similar to those addressed in the SEC’s District Court action against Coinbase.
The dispute between Coinbase and the SEC has been ongoing, particularly since the regulator issued a Wells notice to Coinbase in March and subsequently filed a lawsuit against the exchange, alleging that it had operated as an unregistered broker and exchange, thereby violating federal securities laws.
Coinbase’s Chief Legal Officer, Paul Grewal, took to X on Monday to express his views, stating, “Coinbase is proud to collaborate with Celsius to facilitate the distribution of crypto to its customers. I’m left wondering why the SEC would oppose a reputable U.S. public company taking on this role.”
Celsius Network’s Legal Predicament
Celsius Network filed for bankruptcy last year, accumulating debts amounting to billions of dollars owed to investors. In July, the SEC brought a lawsuit against Celsius and its former CEO, Alex Mashinsky, alleging that they had fraudulently and without registration raised billions through the sale of “crypto asset securities.” The SEC further accused them of repeatedly deceiving investors about Celsius’ financial stability and manipulating the price of CEL, the company’s native token.
In addition to the SEC, others have also raised objections to Celsius’ plan in recent days. The U.S. Trustee, echoing concerns voiced in August, questioned whether creditors possess sufficient information to make an informed decision regarding the approval or rejection of the plan.
