- Coinbase is back in the legal spotlight as the state of Oregon files a lawsuit against it for offering 31 unregistered securities.
- Coinbase’s Chief Legal Officer has responded that the war against the crypto industry waged by the previous administration and its allies is over.
Coinbase has been dragged back to court by Oregon’s attorney general, Dan Rayfield, who on Friday, April 18, filed a 171-page lawsuit against them for facilitating the sales of what was termed as unregistered securities. According to the document available to us, 31 tokens were listed as unregistered securities, and they include AAVE, ADA, XRP, MATIC, SOL, LINK, MKR, ATOM, DASH, XYO, UNI, FLOW, COMP, EOS, etc.
Confirming this lawsuit in a press statement, Rayfield highlighted that Coinbase has taken advantage of the trust it gained from people to offer risky investments that were not adequately checked.
According to him, investors lost money through some of these offerings, and it is only fair for the exchange to be held responsible. In this case, the lawsuit seeks a jury trial as well as penalties that include a $20,000 fine for each violation.
You don’t go in for a medical procedure without knowing the risks. It’s the same for everyday folks who want to invest in cryptocurrency. I am committed to protecting Oregon’s investors so they’re not taken advantage of.
Following the announcement, many have questioned how a state could step in to address a nationwide issue. Explaining this, a professor at the University of Oregon School of Law, Liz Tippet, highlighted that its consumer protection division exists to do “sophisticated litigation on behalf of Oregonians”. Additionally, its position is not a replacement for the “sophisticated federal regulation and enforcement.”
Coinbase Responds to the Lawsuit
On April 18, the Chief Legal Officer at Coinbase, Paul Grewal, disclosed that he had finally received a copy of the complaint filed by the State of Oregon. According to him, the motivation behind the lawsuit is clear based on five key reasons.
Firstly, he highlighted that the order of Judge Katherine Polk Failla, which granted an interlocutory appeal of the case filed by the SEC, was omitted. Secondly, Grewal pointed out that there was no mention of the decision made by Judge Analisa Torres on XRP. As detailed in our last news piece, Judge Torres ruled in 2023 that XRP sold on public exchanges is not a security.
Thirdly, he believes that the lawsuit was motivated by two private law firms that sought to profit from it. On the fourth point, the Coinbase CLO disclosed that the lawsuit describes the chairman of the SEC as a “crypto lobbyist”. Finally, it decries the reassignment of the lead lawyer of the previous administration to the IT Department.
In a blog post, Grewal confidently disclaimed that cryptos are securities while highlighting that the war against the industry is over.
As everyone knows, the war against crypto waged by the previous SEC and its allies is over—crypto won. The SEC finally caught up with the reality that the vast majority of digital assets are not securities—and that there is widespread public support for this revolutionary technology.
Meanwhile, the Oregon lawsuit was filed two months after the SEC dropped similar cases against Coinbase and Binance, as previously indicated in our news coverage.
In a recent update, Coinbase has also filed a Freedom of Information Act (FOIA) request, demanding transparency on the financial implications of the enforcement actions taken by the previous administration.
