The United States Securities and Exchange Commission (SEC) has registered an objection to the reorganization plan of Celsius Network, citing concerns related to its own ongoing lawsuit with cryptocurrency exchange Coinbase.
On September 22, the SEC filed a limited objection and reservation of rights with the U.S. Bankruptcy Court for the Southern District of New York regarding Celsius’s latest proposed restructuring plan. The objection revolves around a supplement to the reorganization plan in which Celsius proposed a distribution services agreement with Coinbase. The SEC expressed concerns that this agreement might require Coinbase to extend beyond the role of a distribution agent, potentially providing services that are central to the commission’s civil suit filed in June.
Despite Celsius’s assurances that they do not intend for Coinbase to provide brokerage services, the SEC expressed reservations about the ambiguity and potential inconsistency in the agreement’s language. The commission stressed that the court should not be asked to approve a deal where material terms are unclear or conflicting.
This development is part of a series of revisions to the Celsius restructuring plan that has been ongoing since March. Meanwhile, Coinbase is embroiled in a lawsuit with the SEC over allegations of offering unregistered securities. Brian Armstrong and Paul Grewal of Coinbase have expressed their pride in engaging with Celsius to help return user funds, as mentioned in a September 25 post on a social media platform.
Adding to the complexities, Celsius had recently announced a deal with Core Scientific, a mining firm. Core Scientific agreed to sell a mining data center to Celsius in exchange for $14 million in cash, resolving all existing litigation between the two entities. This deal was made against the backdrop of Celsius’s default on its payments since filing for bankruptcy in July 2022.
The bankruptcy court has sanctioned Celsius to distribute digital ballots for voting on the restructuring plan in October. The next hearing in the ongoing bankruptcy case is scheduled for October 5, potentially providing further insights and directions in this multi-faceted legal situation.
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