Crypto Clash: SEC vs. Coinbase in Celsius Bankruptcy Case
The U.S. Securities and Exchange Commission (SEC) has raised objections to Coinbase's involvement in Celsius' bankruptcy resolution.
Celsius, a cryptocurrency lending platform, filed for bankruptcy in July 2022 after a sharp decline in its native cryptocurrency’s value, leading to withdrawal issues for customers. The bankruptcy plan includes using Coinbase to distribute cryptocurrency assets back to former clients.
However, the SEC has expressed concerns about this choice of intermediary. They argue that Coinbase’s involvement extends beyond the typical duties of a distribution agent, encompassing brokerage and master trading services.
This raises concerns in light of the SEC’s ongoing legal action against Coinbase in District Court. Additionally, an undisclosed agreement with Coinbase has not been shared with SEC staff, making the terms inconsistent.
The SEC previously filed a lawsuit against Coinbase in June, alleging it operated without proper registration as a securities exchange, broker, or clearing agency. In response, Coinbase’s Chief Legal Officer, Paul Grewal, questioned the SEC’s opposition, expressing the company’s commitment to assisting Celsius customers.
Former Celsius CEO Alex Mashinsky and Roni Cohen-Pavon, the former Chief Revenue Officer, faced arrests and a range of charges from various regulatory bodies, including the SEC, FTC, DOJ, and CFTC. The FTC specifically accused Mashinsky of misleading consumers with false promises of deposit safety and availability on the platform.
In summary, the SEC opposes Coinbase’s role in Celsius’ bankruptcy resolution due to concerns about the extent of Coinbase’s involvement and undisclosed agreements. Coinbase is under SEC scrutiny for alleged unregistered activities. Former Celsius executives face multiple charges, with the FTC accusing them of deceptive practices related to cryptocurrency deposits.