SEC steps in the way of Celsius' attempt to proceed with its restructuring plan.
The US Securities and Exchange Commission (SEC) has filed an objection with the United States Bankruptcy Court for the Southern District of New York, targeting the proposed restructuring plan of crypto lender Celsius Network.
The SEC's apprehensions are partly based on Celsius Network's intention to partner with Coinbase, a cryptocurrency exchange that is also entangled in a separate lawsuit with the SEC.
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The SEC's formal objection was filed on September 22nd, challenging the fourth version of Celsius Network's reorganization plan, which was initially rolled out in March.
One significant element raising eyebrows at the SEC is a provision involving a distribution services arrangement between Celsius Network and Coinbase. The SEC argues that the nature of this partnership could extend beyond distribution activities.
According to the SEC's legal documents, the regulator believes the court should be wary of endorsing an agreement if crucial terms are either absent or ambiguous.
This cautionary stance is fueled by uncertainties surrounding the precise role Coinbase would play in the reorganization, given that the SEC's lawsuit against Coinbase is still pending.
The Debtors have confirmed that they do not intend for Coinbase to provide brokerage services to the Debtors, despite the language in the Coinbase Agreements to the contrary. However, this Court should not be asked to approve a deal where the material terms are missing or inconsistent.
Coinbase's executives haven't been silent on the issue either. Brian Armstrong and Chief Legal Officer Paul Grewal took to social media on September 25th to proclaim their support for Celsius Network's efforts to restore funds to its users.
It is worth noting that recently, Celsius bankruptcy creditors almost unanimously favored the crypto lender's restructuring plan.
The SEC's objection introduces a new twist in Celsius Network's complicated bankruptcy saga and also serves as a cautionary tale for the regulatory hurdles that crypto enterprises may face. As Celsius attempts to regain its ground, the SEC's concerns point to an increasingly complex legal environment for cryptocurrency firms.
