The U.S. Securities and Exchange Commission (SEC) has expressed concerns about Celsius Network's proposed restructuring plan, partly due to the ongoing legal battle between the SEC and cryptocurrency exchange Coinbase.
On September 22, the SEC submitted a limited objection and reservation of rights to the U.S. Bankruptcy Court for the Southern District of New York regarding Celsius Network's latest reorganization plan. This plan, the fourth revision, was filed on August 15, following an initial proposal in March, but it has not yet received approval.
The updated reorganization plan includes a distribution services agreement with Coinbase, a deal that Celsius Network wishes to keep confidential. The SEC has raised concerns that this agreement could potentially require Coinbase to provide services that are at the center of a civil lawsuit the SEC filed against Coinbase in June.
The SEC's objection states, "The Debtors have confirmed that they do not intend for Coinbase to provide brokerage services to the Debtors, notwithstanding language to the contrary in the Coinbase Agreement. However, a court should not be required to approve a transaction in which material terms are missing or inconsistent."
Celsius Network has been revising its reorganization plan since March, while Coinbase has been dealing with the SEC lawsuit, which accuses Coinbase of offering unregistered securities. In response to this objection, Coinbase's CEO, Brian Armstrong, and Chief Legal Officer, Paul Grewal, expressed their support for Celsius Network's efforts to return user funds.
Before filing for bankruptcy in July 2022, Celsius had fallen behind on payments. In August, the bankruptcy court approved Celsius Network's digital ballots to vote on the October reorganization plan. The next hearing in the bankruptcy case is scheduled for October 5.
