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

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.

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