While Coinbase could act as intermediary in the return of funds from the Celsius Network platform to investors, the SEC is trying to intervene in the deal. What’s going on?
SEC skeptical of Coinbase/Celsius deal
It’s no secret that relations between cryptocurrency exchange Coinbase and the Securities and Exchange Commission (SEC) are somewhat strained. But while the two protagonists are settling their differences in court, another case is adding fuel to the fire: the bankruptcy of Celsius.
Bankrupt for over a year now, the company is in the process of restructuring in order to propose an acceptable recovery plan to its creditors. Last night, the platform indicated that an agreement had been reached, notably involving the repayment of around $2 billion in BTC and ETH to the various creditors:
The voting results are in! Over 95% of creditors across all eligible classes voted to accept the Plan, a testament to our collaborative efforts during Chapter 11. https://t.co/9Z5xlBhNts @CelsiusUcc @FahrenheitHldg
– Celsius (@CelsiusNetwork) September 25, 2023
Now, this plan must be submitted to the courts for approval on October 2, during a court hearing.
However, while Coinbase could serve as an intermediary to return cryptocurrencies to investors, as per what was mentioned on file on September 15, involving “a custodial services agreement, a trading agreement and a distribution agreement”, the SEC has expressed its reservations:
“The Debtors propose to engage Coinbase as a distribution agent for international customers under the Plan and request Court approval [of these] agreements. However, the agreements with Coinbase go well beyond the services of a distribution agent, contemplating brokerage services and trading services that implicate many of the concerns raised in the SEC’s district court action against Coinbase. “
Coinbase’s General Counsel speaks
In the face of SEC interference regarding Coinbase’s involvement in the Celsius restructuring plan, Paul Grewal, the exchange’s general counsel, spoke out on X
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… https://t.co/5i1aJDiPXp
– paulgrewal.eth (@iampaulgrewal) September 25, 2023
He wonders why the financial watchdog is opposed to a “trusted American public company taking on this role”. Moreover, he says he looks forward to settling this in bankruptcy court.
In the midst of these disagreements, aggrieved investors may have to wait a little longer before seeing a partial return of their funds. The Mt Gox case shows that this type of dispute can take a long time to resolve.
Meanwhile, Alexander Mashinsky, ex-CEO of Celsius, was arrested this summer in connection with charges brought against him in the management of his platform, and several of his assets were seized by the courts.
