SEC raises concerns over Coinbase’s role in proposed Celsius plan

The SEC, in a Friday court filing, said it reserves its right to object to the plan from Celsius

article-image

CryptoFX/Shutterstock modified by Blockworks

share

The US Securities and Exchange Commission has opposed a plan from Celsius that sought to use Coinbase as a distribution agent for international customers. 

The SEC opposes the plan because they believe that the “Coinbase Agreements go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns raised in the SEC’s District Court action against Coinbase.”

Celsius filed for bankruptcy in July of last year.

The regulatory agency sued the US-based crypto exchange in June of this year, alleging that its staking service violated US securities laws and that it operated as an unregistered broker.

Additionally, the SEC took action against both Celsius and ex-CEO Alex Mashinsky in July. 

The SEC, in its lawsuit, accused the bankrupt crypto lender of misleading investors and raising billions through the “unregistered and fraudulent offers and sales of crypto asset securities.”

Read more: Celsius initiates bankruptcy proceedings to ‘stabilize’ its business

“The Debtors propose to engage Coinbase as Distribution Agent for international customers under the Plan and seek this Court’s approval of the Coinbase Agreements,” the filing continues. 

The proposed bankruptcy restructuring from Celsius, which will need Court approval, could tap Coinbase to provide brokerage services. 

The SEC noted, though, that the Celsius debtors “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.”

“There appears to be an additional agreement with Coinbase, which the Debtors seek to file under seal, but it has not been made available to the SEC staff,” the SEC added. 

The SEC argues further that, “to the extent there is a new agreement that accurately sets forth the arrangement with Coinbase (or if the agreement under seal is operative), it should be provided to this Court and to the SEC.”

The regulatory agency added that it “reserves its rights to object” without Celsius addressing the role that Coinbase will take. 

In response to the filing, Paul Grewal, Coinbase’s chief legal officer, tweeted, “Coinbase is proud to engage with Celsius to distribute crypto back to its customers. I wonder, why would the SEC object to a trusted US public company taking on this role?  We look forward to addressing this with the bankruptcy court and undertaking our important role to make Celsius customers whole.”

Updated Monday Sept. 25 at 12:58 pm ET: Added a quote from Paul Grewal, chief legal officer of Coinbase.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

ao cover.jpg

Research

Arweave recently launched the testnet for AO computer, a new messaging protocol that will sit atop a PoS network and aims to become a scalable global compute platform through parallel processing and modularity.

article-image

The “fastest-growing ETF in history” has seen net inflows on every trading day since its Jan. 11 launch

article-image

Relm and Chainproof will provide insurance quotes to distributed validators

article-image

DLC.Link uses a Taproot-based Bitcoin multisig to let institutions mint dlcBTC, starting on Arbitrum

article-image

Pre-seed Bitcoin startup deals rose 360% in 2023, a TVP report shows

article-image

Circle’s new smart contract to allow holders of BlackRock USD Institutional Digital Liquidity Fund to redeem shares for its stablecoin

article-image

Uniswap says it was not surprised to receive a Wells notice given the SEC’s “abusive” use of power as of late