Celsius Network’s plans to emerge from bankruptcy with the help of cryptocurrency exchange Coinbase would have to overcome another hurdle in the form of the United States Securities and Exchange Commission (SEC) to come to fruition.

In a Sept. 22 filing, the SEC said it has concerns about Coinbase’s proposed involvement in Celsius’ bankruptcy plan. It noted that the agreements “go far beyond the services of a distribution agent, contemplating brokerage services and master trading services that implicate many of the concerns” it raised in its suit against the crypto exchange.

Coinbase was sued by the SEC in June for offering unregistered securities. The regulator accused the company of evading disclosure schemes for securities markets as it has never registered as a broker, national securities exchange, or clearing agency. Additionally, the SEC claimed that 13 tokens offered by the crypto exchange qualified as securities.

Celsius filed for bankruptcy protection in July 2022 and is working to emerge as a new-user-owned firm and distribute about $2 billion worth of Bitcoin (BTC) and Ether (ETH) with the help of Coinbase as part of the plan.

The SEC is the latest entity to challenge the bankrupt firm’s Chapter 11 plan, joining the U.S. Justice Department’s bankruptcy watchdog and some Celsius customers. The SEC has reportedly said that it has discussed its concerns with Celsius’ lawyers and that the company has been addressing other issues with the plan that the regulator has raised.

Meanwhile, Coinbase’s Chief Legal Officer, Paul Grewal, took to social media platform X to question the SEC’s objection to the crypto exchange’s involvement in Celsius’ bankruptcy plan.

“Coinbase is proud to engage with Celsius to distribute crypto back to its customers. I wonder, why would the SEC object to a trusted US public company taking on this role,” Grewal posed. “We look forward to addressing this with the bankruptcy court and undertaking our important role to make Celsius customers whole.”

Judge Martin Glenn is scheduled to consider approving Celsius’ bankruptcy plan on Oct. 2.

The SEC charged Celsius and former CEO Alex Mashinsky with fraud in July. The case has been stayed pending the outcome of Mashinsky's criminal case.