The United States Securities and Exchange Commission (SEC) has recently filed an objection to Celsius Network’s reorganization plan, citing concerns related to the regulator’s ongoing lawsuit with prominent crypto exchange Coinbase. The objection was submitted on September 22 to the U.S. Bankruptcy Court for the Southern District of New York, wherein the SEC filed a limited objection and reservation of rights regarding Celsius’ most recent proposed restructuring plan. Although this plan, which was filed on August 15, was the fourth revision of the bankruptcy plan, it has not yet received approval.
One of the key elements of the proposed reorganization plan was a distribution services agreement between Celsius and Coinbase. The agreement had been submitted by Celsius under seal, but the SEC argued in its objection that this deal could potentially involve Coinbase offering services that are at the center of the commission’s civil suit filed against the exchange in June. The objection also stated that the material terms of the deal were either missing or inconsistent, further highlighting the SEC’s reservations regarding the plan.
The restructuring plan revisions have been an ongoing process for Celsius since March, coinciding with Coinbase’s legal battle with the SEC over allegations of offering unregistered securities. Despite this, Coinbase CEO Brian Armstrong and chief legal officer Paul Grewal expressed their pride in engaging with Celsius to distribute crypto back to its customers. In a tweet on September 25, Grewal questioned why the SEC would object to a trusted U.S. public company taking on this role and expressed the exchange’s willingness to address the matter in bankruptcy court.
The recent bankruptcy court filing by Celsius followed the announcement of a deal with Core Scientific, whereby the mining firm agreed to sell a mining data center to Celsius in exchange for $14 million in cash and the resolution of all existing litigation between the two companies. Core Scientific claimed that Celsius had defaulted on its payments since filing for bankruptcy in July 2022.
In August, the bankruptcy court granted approval for Celsius to send out digital ballots to its stakeholders to vote on the proposed restructuring plan in October. The next hearing in the bankruptcy case is scheduled for October 5.
It is important to note that Celsius’ reorganization plan has faced multiple revisions and hurdles, mainly due to the ongoing SEC lawsuit with Coinbase. The concerns raised by the SEC regarding the proposed distribution services agreement with Coinbase have further complicated the approval process. Celsius and Coinbase will now have to navigate these challenges and work towards resolving the objections raised by the SEC in order to move forward with their respective restructuring plans.
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