Oregon Attorney General’s Legal Battle with Coinbase Over Crypto Classification
In a significant legal maneuver, Oregon’s Attorney General has taken a bold step by identifying XRP and 30 additional digital currencies as “unregistered securities” in a formal complaint against the crypto exchange giant, Coinbase. This state-level lawsuit comes on the heels of the Securities and Exchange Commission’s (SEC) controversial decision to abandon its own legal action against Coinbase, a move that has sparked widespread debate among industry stakeholders and investors, with accusations of the action being both unlawful and politically driven.
XRP, SOL, and ADA Under Fire as Alleged ‘Unregistered Securities’
On April 18, Oregon Attorney General Dan Rayfield initiated a legal complaint against Coinbase, asserting that the U.S.-based cryptocurrency platform breached Oregon’s securities regulations by enabling the sale of unregistered digital assets to residents in the state. The complaint, filed in the Multnomah County Circuit Court, alleges that Coinbase persistently violated Oregon Securities Law, which holds individuals accountable for selling or soliciting the sale of securities in contravention of the statutes. The document also implicates those who assist in the sale of such securities.
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Justin Slaughter, Paradigm’s Vice President of Regulatory Affairs, described the complaint as a comprehensive legal attack that targets a significantly larger array of tokens compared to the SEC’s previous case. The lawsuit accuses Coinbase of offering 31 cryptocurrencies as investment contracts, listing tokens such as AAVE, ADA, ALGO, AMP, APE, ATOM, AVAX, AXS, CHZ, COMP, DASH, DDX, EOS, FIL, FLOW, ICP, LCX, LINK, MATIC, MIR, MKR, NEAR, POWR, RLY, SAND, SOL, UNI, VGX, WLUNA, XRP, and XYO as unregistered securities.
Comparison with the SEC’s Previous Legal Action
Journalist and podcast host Eleanor Terrett observed that Rayfield’s complaint includes 18 more cryptocurrencies than those identified in the SEC’s initial case, which listed 13 tokens: SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO. To provide context, the SEC had pursued Coinbase in June 2023, alleging that the exchange functioned as an unregistered securities exchange and unlawfully sold unregistered securities via its staking program. This lawsuit, however, was dismissed by February 2025.
Coinbase’s Reaction to Oregon’s Legal Accusations
Paul Grewal, Coinbase’s Chief Legal Officer, has been vocal in his criticism of the Oregon Attorney General’s lawsuit. He stated that the AG’s accusations imply that all involved in the crypto industry are violating securities laws and misleading their token holders. Grewal revealed that Coinbase had informed about 560,000 of its Oregon-based users about the allegations brought against them. Last week, he labeled the lawsuit as an unnecessary expenditure of taxpayer money in Oregon.
Rayfield contends that Coinbase sold high-risk investments without appropriate vetting, leading to substantial financial losses for Oregon residents. In contrast, Grewal has argued that the lawsuit is politically motivated, pointing out that the complaint omits critical details and follows a line of reasoning similar to that of the SEC.
Political and Regulatory Implications
Grewal has criticized the complaint for omitting Judge Failla’s order for an interlocutory appeal in the SEC case and failing to mention Judge Torres’ decision concerning XRP. Furthermore, he raised concerns about the involvement of private law firms profiting from the lawsuit and criticized the portrayal of the SEC Chairman as a “crypto lobbyist.” Grewal suggests that the Oregon AG’s case is an attempt to revive the SEC’s criticized regulatory approach.
The SEC, having shifted its strategy away from “regulation by enforcement,” has reduced its focus on crypto-specific enforcement, closing or pausing major litigations and creating a Crypto Task Force to establish a comprehensive regulatory framework.
The Broader Impact on the Cryptocurrency Market
As of now, the total cryptocurrency market capitalization stands at $2.8 trillion, reflecting the ongoing complexities and challenges faced by the industry in navigating regulatory landscapes. This legal battle underscores the dynamic and evolving relationship between regulatory bodies and the burgeoning cryptocurrency sector.
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