SEC Opposes Celsius Plan to Use Coinbase as Distribution Agent for International Customers
On Monday, September 25, the United States Securities and Exchange Commission (SEC) opposed the crypto firm Celsius Network's proposal to involve Coinbase as part of its bankruptcy and reorganization plan.
Last week, in the Friday lawsuit, Celsius stated its plans to use Coinbase to distribute digital assets to its international customers and wants approval from the court.
The lawsuit disclosed the Coinbase Prime Broker Agreement, which under this agreement, Coinbase would provide brokerage and master trading services to Celsius.
However, the SEC objected, stating that this agreement needs further scrutiny.
"The Coinbase Agreements go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns raised in the SEC's District Court action against Coinbase," (alleging, among other things that Coinbase "has acted as an exchange, broker, and a clearing agency, without registering […]."
The SEC's objection filing revealed that Coinbase's proposed activities could lead to further legal disputes, considering Coinbase is currently embroiled in an ongoing lawsuit with the SEC. This concern arose from the ongoing case which the SEC accused Coinbase of operating as an unregistered securities exchange, alleging a violation of federal securities law.
In a subsequent filing, the SEC pointed out that the debtors have clarified that they do not intend for Coinbase to offer brokerage services, contrary to what is stated in the Coinbase Agreements. The SEC also highlighted the existence of an additional agreement with Coinbase that has not yet been shared with SEC staff.
The SEC contends that this undisclosed agreement should be presented to the court. While the
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