Coinbase has (NASDAQ:COIN) has shared some comments after Oregon’s Attorney General, Dan Rayfield, filed a securities enforcement action against the company.
This lawsuit basically revives arguments previously dismissed by the U.S. Securities and Exchange Commission (SEC), marking a contentious return to what Coinbase describes as “regulation by enforcement.”
The move has sparked debate about the future of cryptocurrency regulation in the U.S., highlighting tensions between state and federal authorities and the need for cohesive, forward-thinking legislation.
According to Coinbase’s Chief Legal Officer, Paul Grewal, Oregon’s lawsuit rehashes “stale, repeatedly refuted theories” that the SEC abandoned when it dismissed its case against Coinbase earlier this year.
The SEC’s case, filed in June 2023, alleged that Coinbase had operated as an unregistered securities exchange, broker, and clearing agency, and offered unregistered securities through its staking-as-a-service program.
However, under the new Trump administration and acting SEC chair Mark Uyeda, the agency dropped multiple, high-profile crypto-related lawsuits, including those against Coinbase, Binance, and Uniswap, signaling a shift toward a less aggressive regulatory stance.
Oregon’s recent decision to pursue a similar case has been criticized by crypto exchange Coinbase as “political jockeying” and an “embarrassing waste of Oregon taxpayer dollars.”
The 171-page lawsuit, filed in Multnomah County Circuit Court, alleges that Coinbase violated Oregon’s securities laws by facilitating the sale of unregistered cryptocurrencies without adequate disclosures.
Rayfield argues that these actions expose investors to high-risk investments, citing examples like the Internet Computer Protocol (ICP), which plummeted from $700 to $72 shortly after its launch on Coinbase.
The lawsuit seeks penalties, including a $20,000 fine per alleged violation, and aims to fill what Rayfield calls an “enforcement vacuum” left by federal regulators under the Trump administration.
Coinbase contends that Oregon’s approach undermines bipartisan efforts in Washington, D.C., to establish comprehensive federal legislation for digital assets.
Grewal emphasized that Congress is closer than ever to passing laws that would provide clear rules for the crypto industry while preventing “rogue state governments” from launching politically motivated actions.
The company argues that state-level enforcement, like Oregon’s, creates a fragmented regulatory landscape that stifles innovation and confuses stakeholders.
This sentiment is echoed by industry analysts who warn that a patchwork of state regulations could hinder the growth of the nascent US crypto markets.
Despite the legal challenge, Coinbase says that it remains confident in its position, asserting that the lawsuit is meritless and that the majority of digital assets are not securities—a view increasingly supported by federal regulators.
The digital assets exchange has now vowed to fight the case while maintaining normal operations in Oregon.
Grewal’s public statements, including posts via social medi, underscore Coinbase’s frustration, accusing Oregon of “resurrecting the dead” by picking up where former SEC Chair Gary Gensler left off.
According to Coinbase, Oregon’s lawsuit highlights a broader issue: the lack of unified crypto regulation in the U.S.
While states like Vermont and South Carolina have dropped similar cases against Coinbase, Oregon’s persistence underscores the challenges of navigating a decentralized industry in a fragmented regulatory environment.
As bipartisan momentum grows for federal legislation, Coinbase and other industry participants continue to call for clearer, national guidelines to foster innovation and protect consumers in the web3 and crypto space without resorting to outdated enforcement tactics.