(Bloomberg) -- The US Securities and Exchange Commission said it has concerns about Coinbase Global Inc.’s proposed involvement in Celsius Network’s plan to emerge from bankruptcy.

Under the proposed plan, Celsius agreed to engage Coinbase to distribute assets to international customers. In a filing on Friday, the SEC — which charged Coinbase earlier this year with operating as an unregistered securities exchange, broker and clearing house — said the 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 its suit. 

Celsius filed for bankruptcy protection in July 2022, and is working to emerge as a new user-owned company and distribute an estimated $2 billion of Bitcoin and Ether as part of the plan. Celsius wants to start fresh under new management led by investment firm Arrington Capital, part of a consortium called Fahrenheit LLC that won the crypto lender’s assets at a bankruptcy auction earlier this year.

Read more: Celsius to Poll Customers on Launching New User-Owned Company

The SEC joined the Justice Department’s bankruptcy watchdog and some Celsius customers in challenging aspects of the company’s Chapter 11 plan. Such challenges are common in Chapter 11 and may be resolved before Judge Martin Glenn is scheduled to consider approving Celsius’ bankruptcy plan on Oct. 2. The SEC said it has discussed its concerns with Celsius’ lawyers and that the company has been addressing other issues with the bankruptcy plan that the regulator has raised.

Coinbase, which is fighting the SEC’s lawsuit, declined to comment beyond a Monday post on X (formerly Twitter) from its chief legal officer Paul Grewal, “I wonder, why would the SEC object to a trusted US 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.”

The SEC has also leveled fraud allegations against Celsius and its former Chief Executive Alex Mashinsky, who also faces criminal charges to which he has pleaded not guilty. The SEC said its case has been stayed pending the outcome of the criminal case against Mashinsky.

Separately, Michael Arrington, founder of Arrington Capital, said on Monday he will no longer be on the new company’s board, and his seat will go to his partner at Fahrenheit, Ravi Kaza.

“I still fully support the deal, and look forward to contributing in ways other than participating on the board of directors,” Arrington said in the tweet. “Apart from not joining the board of directors, our investment and active advisory role via Fahrenheit will go on as planned.” Arrington didn’t return a request for comment.

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