The plan proposed by Celsius to use Coinbase as a distributor for international customers has faced opposition from the United States Securities and Exchange Commission (SEC). The SEC is against this plan due to the belief that it exceeds the scope of distribution agency services, involving aspects of brokerage and master trading services which raise many of the concerns presented in the SEC District Court case against Coinbase. Celsius initiated bankruptcy proceedings in July of the previous year. The regulatory agency had filed a lawsuit against the US based cryptocurrency exchange in June of this year, alleging that its staking service violated US securities laws and that it operated as an unregistered broker. Furthermore, in July, the SEC took legal action against both Celsius and its former CEO, Alex Mashinsky. In its lawsuit, the SEC accused the bankrupt cryptocurrency lender of deceiving investors and generating billions of dollars through unregistered and deceptive offerings and sales of cryptocurrency securities. The bankruptcy restructuring proposal put forth by Celsius, contingent upon Court approval, could potentially involve Coinbase in providing brokerage services. However, the SEC pointed out that the Celsius debtors have stated that they do not intend for Coinbase to offer brokerage services to them, despite certain statements suggesting otherwise. The regulatory agency also emphasized that it retains the right to object if Celsius does not address the specific role that Coinbase will play going forward. In response to this filing, Coinbase Chief Legal Officer Paul Grewal said that the exchange is pleased to collaborate with Celsius to distribute cryptocurrencies to its customers. Paul added that he is curious as to why the SEC opposes a reputable US public company assuming this responsibility, and that he eagerly awaits discussing this matter with the bankruptcy court and fulfilling the vital role Coinbase has in compensating Celsius customers.
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