The US Securities and Exchange Commission (SEC) is objecting to including crypto exchange Coinbase to distribute settlement meant for Celsius Network’s international creditors. The Gary-led securities regulator expressed dissatisfaction with Coinbase becoming the distribution agent for the insolvent crypto lender Celsius Network.
Celsius Network Devotes to Resolve the Bankruptcy Proceedings
In the Friday September 22 filing, the securities regulator revealed that utilizing Coinbase as Celsius Network’s distribution agent violates the services an agent would offer for brokerage and master trading. The plan to engage Coinbase for distribution agent services could implicate concerns that the SEC raised before the District Court when charging the crypto exchange in June 2023.
Celsius Network is among the several crypto companies that plunged into bankruptcy in 2022 alongside FTX and BlockFi. Its efforts to settle dues owed to former customers led to identifying Coinbase for the distribution agent role.
The Friday filing alleged that using Coinbase for distribution services could implicate the concerns the SEC alleged in the June lawsuit against the crypto exchange. SEC submitted that Coinbase would become the intermediary connecting crypto buyers and sellers.
The regulator cites the lawsuit it initiated against the San Francisco-headquartered crypto exchange in mid-2023. The SEC regulator alleged that Coinbase failed to register its clearing house, brokerage, and exchange services besides selling unregistered securities.
Celsius Reorganization Plan Entangled in Coinbase Lawsuit
Coinbase chief legal executive Paul Grewal disputed SEC arguments in the Monday September 25 post on X (formerly Twitter). The legal officer questioned why the SEC objected to the trusted public entity assuming the role.
Grewal assured that Coinbase would take on the arguments by SEC before the bankruptcy court and readily assume the distribution role of making the Celsius Network customers whole.
The SEC, alongside the Justice Department and Commodity Futures Trading Commission (CTFC), would, in July, charge Celsius Network, alleging it offered unregistered securities for sale and deceived customers on the safety of its platform.
Besides, the regulators accuse Celsius of promising considerable returns to the investors only for it to halt user withdrawals, citing extreme market conditions.
Also, the Department of Justice (DoJ) charged former Celsius boss Alex Mashinsky with seven criminal counts. It would also freeze his assets, though the accused secured $40M bail.
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