Background of the Celsius Network Case
The saga surrounding Celsius Network continues to unfold like a mystery novel—complete with twists, turns, and a few unexpected plot holes. As of September 22, the United States Securities and Exchange Commission (SEC) has thrown a wrench into Celsius’ proposed reorganization plan in bankruptcy court. This new complication is partially tied to the regulator’s ongoing legal confrontation with cryptocurrency exchange Coinbase.
What the SEC Objected To
The SEC’s limited objection to Celsius Network’s fourth revision of its restructuring plan, filed on August 15, raises eyebrows. The objection includes concerns over a distribution services agreement between Celsius and Coinbase, which Celsius tried to keep hush-hush by filing under seal. The SEC contends that this agreement might require Coinbase to juggle roles beyond that of a plain old distribution agent, potentially stepping into murky waters relevant to its ongoing lawsuit against Coinbase.
It seems Celsius has claimed that they don’t intend for Coinbase to act as a brokerage service, yet the SEC argues that the essence of the agreement appears contradictory. “However, this Court should not be asked to approve a deal where the material terms are missing or inconsistent,” the SEC’s filing asserts, potentially making it sound like something out of a soap opera.
Coinbase’s Stance
Amid all the drama, Coinbase is not shying away from the limelight. In a tweet from September 25, Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal expressed pride in engaging with Celsius in an effort to return user funds. “I wonder, why would the SEC object to a trusted US public company taking on this role?” they quipped, welcoming the court’s attention. Guess it’s safe to say they’re ready for a showdown.
The Ongoing Bankruptcy Revisions
The plot thickens with continuous revisions to the Celsius restructuring plan since March. Would this be the final edit, or will we see more drafts roll out before the Oct. 5 hearing? In interesting news, along the way, Celsius has made a deal with Core Scientific, which involves selling assets in exchange for cold cash—14 million of them, to be precise—and resolving all outstanding disputes. How convenient. However, it’s worth noting that this deal comes after Celsius defaulted on payments since filing for bankruptcy in July 2022.
The Road Ahead
If you’re keeping score, the bankruptcy court has given a green light for Celsius to send out digital ballots for users to vote on the restructuring plan this coming October. Mark your calendars; it’s going to be a nail-biter! As we wait for the next hearing and updates, one thing’s for sure: the courtroom drama isn’t over yet, and neither is the perplexity surrounding crypto and regulatory challenges.
