Oregon Sues Coinbase, Claiming the Cryptocurrency Exchange Broke State Securities Laws

Dan Rayfield, Oregon's attorney general, brought suit against Coinbase, a cryptocurrency exchange, claiming breaches of the state's securities laws.

A lawsuit filed by the state of Oregon claims that the cryptocurrency exchange Coinbase Inc allowed the sale of risky investments without consumer safeguards.

The lawsuit filed in Multnomah County Circuit Court accuses Coinbase of permitting the sale of digital assets in Oregon without registering the tokens as securities.

The lawsuit, which comes after the U.S. Securities and Exchange Commission dropped its own case against Coinbase in February 2025, says that the exchange's actions were unlawful.

The lawsuit claims that the exchange's actions led to the loss of money by Oregonians in the wake of significant market declines in cryptocurrencies. It cites the example of the Internet Computer Protocol (ICP) cryptocurrency, which fell sharply from around $700 to $7 per token after Coinbase added it to its exchange.

The lawsuit argues that the 99% price reduction of the assets demonstrates how Coinbase is facilitating the trading of unregistered securities.

The lawsuit arises as the top U.S. cryptocurrency exchange, Coinbase, manages the addition of tokens and executes trades while promoting digital assets to its users.

Oregon's legal argument is that these exchange activities require the registration of securities that generate potential risks through fraudulent market manipulation techniques, including pump-and-dump schemes.

The lawsuit seeks financial restitution for investors and pushes for stronger consumer protection standards. It also aims to impose stronger regulatory oversight on the cryptocurrency industry.

Coinbase Is Defiant Towards Oregon Lawsuit

Paul Grewal, chief legal officer of Coinbase, responded to the state of Oregon's lawsuit by saying that the legal challenge was merely a copycat of the SEC's case, which had already been dismissed.

Pointing out that the apex court had already declined to hear the matter further and ruled against any attempt to re-file it, Grewal maintained that the lawsuit was a frivolous use of state resources.

Coinbase maintains its stance that digital currencies fall under the classification of digital commodities rather than financial securities. The company declared it would defend itself vigorously against Oregon's allegations as its operations comply fully with existing regulatory standards.

However, Grewal expressed his critique against the state for taking enforcement measures instead of establishing proper regulatory frameworks for cryptocurrency businesses within the state.

The lawsuit arrives amid active discussions about cryptocurrency oversight. The Trump administration's actions allowed the SEC to pursue gentler enforcement against cryptocurrency platforms like Coinbase and Kraken.

The legal action in Oregon showcases an increasing divergence between state-based and federal leadership in digital asset supervision.

The state's legal filing highlights how investors lost money while Coinbase earned transaction fees during a period when Oregonians suffered substantial financial setbacks. The document mentions the Internet Computer Protocol (ICP) as a specific instance where the SEC had noted market value declines after Coinbase listing, leading to billions in investor losses.

The Department of Justice in Oregon presents the lawsuit as a strategy to defend consumers from uncontrolled market operations. The state maintains that Coinbase enables cryptocurrency listings and promotion activities, which create dangerous trading conditions lacking proper regulatory protection systems.

State Takes Action Due to Federal Inaction

The lawsuit serves as Rayfield's office's required response to federal authorities' insufficient regulatory oversight. After the SEC dropped its case while transferring its lead attorney to another IT role, Oregon felt obliged to act owing to the resulting regulatory gap.

The legal complaint, spanning 171 pages, details how Coinbase manages its platform between buyers and sellers by handling funds and performing trades of unregistered securities.

Oregon believes these investment practices violate state securities regulations since such offerings require registration with public disclosure obligations, which were not fulfilled by Coinbase.

Despite the pending legal matter, the cryptocurrency exchange continues its operations in Oregon without interruption. The exchange maintains its position that its actions comply with relevant legal requirements and that it is prepared to defend itself fully against the lawsuit.

In building its defense, the exchange cites multiple federal court rulings, including Judge Failla's approval of mid-case appeals in the SEC's lawsuit. Furthermore, the exchange highlights that the apex court declined to hear the SEC's appeal on the matter.