May 29, 2024
SEC and Coinbase Clash Over Celsius' Request for Distribution Agent Role
Policy & Regulation

SEC and Coinbase Clash Over Celsius’ Request for Distribution Agent Role

The U.S. Securities and Exchange Commission (SEC) and cryptocurrency exchange Coinbase are at odds over the distribution agent function that defunct crypto lender Celsius wants the exchange to take on.

The top regulator stated in a document on Friday that Celsius’ intention to utilize Coinbase as a distribution agent for overseas clients “goes far beyond the services of a distribution agent, contemplating brokerage services and master trading services.”

One of the numerous businesses in this industry that failed last year was Celsius. Under its new leadership, it is currently attempting to return previous clients’ money, and it needs Coinbase’s assistance to do so.

However, the proposal to use Coinbase services may “implicate many of the concerns raised in the SEC’s District Court action against Coinbase,” according to a filing on Friday. Specifically, the SEC claimed that the exchange would function as a middleman between buyers and sellers of cryptocurrency. 

In June, the regulator filed a lawsuit against the San Francisco-based business, stating that not only had it been required to register as a broker, exchange, and clearing house, but that it had also traded unregistered securities.

Coinbase Chief Legal Officer Paul Grewal tweeted on Twitter Monday: “I wonder, why would the SEC object to a trusted U.S. public company taking on this role?”

“We look forward to addressing this with the bankruptcy court and undertaking our important role to make Celsius customers whole,” he further added.

In July, the SEC, DOJ, FTC, and CTFC filed a complaint against Celsius, saying that the company had misled clients several times about how secure the platform was and had marketed unregistered securities.

The “safest place for your cryptocurrency,” Celsius promised investors large profits, but it stopped allowing customer withdrawals in June of last year due to “extreme market conditions.”

Since then, the Department of Justice has filed seven criminal complaints against Alex Mashinsky and frozen his assets.

Image: Flickr

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