Coinbase CLO Addresses Oregon Complaint, Points To ‘Bias And Profiting Law Firms’

Oregon Attorney General Dan Rayfield has initiated legal action against Coinbase, one of the leading cryptocurrency trading platforms in the United States. 

The lawsuit, filed in Multnomah County Circuit Court, alleges that Coinbase has violated Oregon Securities Law by facilitating the sale of unregistered cryptocurrencies to residents of the state, leading to notable financial losses for investors.

Allegations Of Misconduct

In his statement, Rayfield emphasized the trust that Oregon consumers placed in Coinbase, which he claims was breached when the platform sold high-risk investments without adequate vetting. “Oregonians lost money, and we believe Coinbase should be held accountable and take steps to protect consumers,” he asserted.

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.

“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,” Rayfield stated.

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.

Coinbase’s Response

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.

Featured image from DALL-E, chart from TradingView.com