On September 23, the US Securities and Exchange Commission (SEC) filed an objection to part of a reorganization plan of the bankrupt crypto company Celsius.
This filing shows that Celsius aims to have the crypto exchange Coinbase act as a distribution agent and return funds to former users affected by its collapse. To this end, Celsius is seeking approval of a related agreement from the bankruptcy court.
However, the SEC claims that the role Coinbase is expected to play, according to the filing, exceeds the typical duties of a distribution agent. The regulator also highlighted inconsistencies: Celsius has stated that Coinbase does not intend to provide brokerage services, but the agreement with Coinbase suggests that such services will indeed be provided.
The securities regulator said it believes the two companies have an additional agreement that they plan to file under seal. The supervisor argued that, if a new agreement is reached, that agreement should be provided to itself and to the judge.
The SEC added that some of the trading services described in the agreement are related to several concerns they raised in the June 6 lawsuit against Coinbase.
Coinbase Chief Legal Officer Paul Grewal commented on the issue on September 25. Grewal wrote that his company is “proud to partner with Celsius to distribute crypto back to its customers.” He also questioned why the SEC is against the distribution plan and said his company will handle the matter within Celsius’ bankruptcy proceedings.
Celsius originally halted filming in June 2022 and filed for bankruptcy about a month later in July. a Forbes The report at the time found that the company owed $4.7 billion to creditors, including retail users but excluding institutional partners.
SEC concerns also extend to the CEL token
The SEC noted that it has raised allegations surrounding Celsius’ CEL token in a securities fraud case. That case started in July and is separate from the bankruptcy case.
In the fraud case, the SEC alleges that Celsius and its former CEO Alex Mashinksy offered and sold the CEL token in unregistered and fraudulent securities offerings.
Now, as part of its latest complaint in the bankruptcy case, the SEC has asked the court to decide whether CEL is a security. It was also requested that the consequences of this ruling be limited to the dispute over Celsius’s distribution plan. The regulator said any broader ruling could “hinder and jeopardize” the separate securities case against Celsius.
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