SEC’s Limited Objection to Celsius’ Plan
On September 22, the United States Securities and Exchange Commission (SEC) made waves by filing a limited objection to Celsius Network’s restructuring plan in the U.S. Bankruptcy Court for the Southern District of New York. This objection has left industry watchers scratching their heads, primarily due to its roots in the SEC’s ongoing legal tussle with the crypto exchange Coinbase.
The Latest Bankruptcy Plan Updates
Celsius’s fourth revision of its bankruptcy plan, which was filed on August 15, is still hanging in limbo as it awaits approval. The drama unfolds as Celsius attempts to get the green light for what’s described as a distribution services agreement with Coinbase—an agreement the SEC feels may tread into murky waters. In its objection, the SEC asserts that this deal could compel Coinbase to engage in activities that go beyond merely distributing assets, which could dangerously overlap with the pending lawsuit against Coinbase for allegedly dealing in unregistered securities.
Celsius and Coinbase: Are They on the Same Team?
Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal took to social media to express their commitment to helping Celsius return customer funds. “Proud to engage with Celsius,” Armstrong tweeted, challenging the SEC’s concerns about their role in the plan. “I wonder, why would the SEC object to a trusted US public company taking on this role?” The rhetorical flair stands as a testament to the defiance of cryptocurrency exchanges against regulatory heads.
What’s Wrong With the Terms?
The SEC’s filing nails down its frustrations by highlighting that critical terms of the proposed agreement with Coinbase are either missing or inconsistent across documentation. “The Debtors have confirmed they do not intend for Coinbase to provide brokerage services…despite the language in the Coinbase Agreements to the contrary,” reads the SEC’s objection. It seems like Celsius is stuck in a game of semantics, and the SEC is the ultimate referee, blowing the whistle on potential foul play.
Looking Ahead: What’s Next for Celsius?
In the midst of this complex narrative, the bankruptcy court has set a date for the next hearing for October 5. Meanwhile, Celsius just announced a deal to acquire a mining data center from Core Scientific for $14 million—an indication that it’s trying to keep spinning plates while navigating turbulent waters. Following the bankruptcy court’s approval for Celsius to send out ballots to vote on the restructuring plan in October, the momentum is certainly escalating. So, can Celsius and Coinbase tide over these challenges? Time will tell.
