The US Securities and Exchange Commission (SEC) has filed an objection to Celsius Network’s reorganization plan based in part on the regulator’s ongoing lawsuit with cryptocurrency exchange Coinbase.
In a September 22 filing with the U.S. Bankruptcy Court for the Southern District of New York, the Securities and Exchange Commission foot Limited objection and reservation of rights to Celsius’ recently proposed restructuring plan. Fourth review of the bankruptcy plan foot on August 15, after initially being proposed in March but not approved.
An addendum to the reorganization plan proposed a distribution services agreement with Coinbase which Celisis sought to file under seal. The SEC claimed in its dissent that the deal could require Coinbase to “go beyond distribution agent services,” potentially providing the services at issue in the civil lawsuit the SEC filed in June.
“The Debtors have asserted that they do not intend for Coinbase to provide brokerage services to the Debtors, despite the language in the Coinbase Agreements to the contrary,” the filing said. “However, this court should not be asked to approve a transaction in which material terms are missing or inconsistent.”
Reviews of Celsius’ restructuring plan have been ongoing since March, while Coinbase faces an SEC lawsuit over offering unregistered securities. On September 25, Coinbase CEO Brian Armstrong and Chief Legal Officer Paul Grewal He said The exchange was “proud to partner with Celsius” in its efforts to return users’ funds:
Coinbase is proud to work with Celsius to distribute cryptocurrencies to its customers. I wonder, why would the SEC object to a trusted US public company assuming this role? We look forward to addressing this matter with the Bankruptcy Court and doing our important part to make… https://t.co/5i1aJDiPXp
– paulgrewal.eth (@iampaulgrewal) September 25, 2023
Related: Celsius opts for NovaWulf’s bid to emerge from bankruptcy
The bankruptcy filing came on the heels of Celsius announcing a deal with Core Scientific in which the mining company agreed to sell a mining data center to Celsius for $14 million in cash and settle all existing legislation between the two companies. According to Core Scientific, Celsius has defaulted on its payments since filing for bankruptcy in July 2022.
In August, the bankruptcy court approved Celsius sending digital ballots to vote on the restructuring plan in October. The next hearing in the bankruptcy case is scheduled for October 5.
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