SEC Challenges Coinbase Role In Celsius Asset Distribution

The United States Securities and Exchange Commission (SEC) opposes the use of crypto exchange Coinbase by the now-bankrupt crypto lender Celsius for distributing crypto assets to creditors.

“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 filing noted.

SEC Alleges Lack of Clarity in Coinbase Agreements with Celsius

In a recent court filing, the SEC expressed its disapproval of Celsius Debtor’s recent proposal for Coinbase to assume the role of the distribution agent for international customers. This implies that Coinbase would be responsible for supervising the return of crypto assets to customers on behalf of Celsius.

However, the SEC contends that there is a lack of data in the contract. It also argues that it remains unclear what precisely is transpiring.

It reaffirms the Debtors’ intent not to use Coinbase for brokerage services, despite the Coinbase Agreements’ language.

However, the SEC argues that the court should not be expected to “approve a deal where the material terms are missing or inconsistent.”

“The SEC reserves its rights to object if the Debtors do not adequately address Coinbase’s role in the confirmation order and in an amended agreement that, in material part, is made available for review.”

Paul Grewel, Coinbase’s chief legal officer, expressed bewilderment at the SEC’s objection to Coinbase assuming the distribution role. Nevertheless, he asserted Coinbase’s intention to challenge the objection in court.

“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.”

Celsius Creditors Strongly Back Bankruptcy Plan

In a separate court filing on September 25, it is revealed that most creditors support the bankruptcy plan. The Celsius Retail Borrower and General Earn creditor votes showed strong support, with 98.83% and 99.35% in favor, respectively.

Meanwhile, Michael Arrington, founder of Arrington Capital, has resigned from the board overseeing the bankruptcy plan for Celsius. Arrington pointed to differences in the board’s configuration as the primary reason.

He stated that Ravi Kazi, a partner at Fahrenheit, will assume his position.