Oregon Sues Coinbase Over Unregistered Cryptocurrency Sales, Citing 99% Loss

Oregon's Attorney General, Dan Rayfield, has filed a lawsuit against Coinbase, a major cryptocurrency trading platform, alleging violations of state securities laws. The lawsuit, filed in Multnomah County Circuit Court, claims that Coinbase facilitated the sale of unregistered cryptocurrencies to Oregon residents, leading to significant financial losses for investors. The Attorney General emphasized the trust that Oregon consumers placed in Coinbase, which he claims was breached when the platform sold high-risk investments without adequate vetting. The complaint alleges that Coinbase operates as an exchange that supports the sale of unregistered securities, which are often associated with higher risks. The platform is accused of approving cryptocurrencies, connecting buyers and sellers, managing trades, and promoting various digital assets to Oregonians without proper regulatory oversight. The lawsuit points out that these alleged unregistered securities are “vulnerable to schemes” such as pump-and-dump operations and fraud, which can result in devastating losses for investors. A notable example cited by the Attorney is the Internet Computer Protocol (ICP), which the Securities and Exchange Commission (SEC) previously identified as an unregistered security. After its launch on Coinbase, ICP’s price dramatically fell from $700 to $72 within a month, and it now trades around $7—a staggering drop of nearly 99%.

This legal move comes in the wake of the SEC’s recent decision to drop its case against Coinbase and reassign the attorney leading that case. Rayfield highlighted the necessity for state-level enforcement in the absence of robust federal action. In response to the lawsuit, Coinbase’s Chief Legal Officer, Paul Grewal, expressed strong dissent on social media platform X (formerly Twitter). He described the lawsuit as a “copycat case” of the SEC’s earlier enforcement action against Coinbase, which was dismissed. Grewal further criticized the legal action as a “politically motivated effort” that wastes taxpayer dollars and detracts from the urgent need for bipartisan legislation addressing digital assets. The executive also pointed out perceived omissions in the Oregon AG’s complaint, claiming it disregarded key judicial rulings and appeared influenced by private law firms seeking to profit from the lawsuit. Grewal asserted that the exchange remains confident in its legal standing and is prepared to contest what he characterized as a misguided lawsuit. He concluded by stating that business operations in Oregon would continue as usual.

The lawsuit against Coinbase by Oregon's Attorney General has intensified the ongoing debate over cryptocurrency regulation. The legal action comes at a time when the SEC has recently retreated from its case against Coinbase, and XRP has achieved a legal victory. However, the Oregon lawsuit has notably omitted any mention of XRP, which has been a focal point in recent regulatory battles. This omission raises questions about the specific targets and motivations behind the lawsuit. The absence of XRP from the Oregon complaint suggests that the state's legal action may be more focused on broader issues of cryptocurrency regulation rather than targeting specific digital assets. The lawsuit's emphasis on unregistered securities and the risks they pose to investors highlights the need for clearer regulatory frameworks in the cryptocurrency space. The legal battle between Coinbase and Oregon's Attorney General is likely to have significant implications for the future of cryptocurrency regulation in the United States. As the case unfolds, it will be crucial to monitor how the courts and regulatory bodies respond to the allegations and the broader implications for the cryptocurrency industry.