Oregon Sues Coinbase Over Unregistered Digital Assets Trading

Oregon's attorney general, Dan Rayfield, has initiated legal action against Coinbase, a prominent cryptocurrency exchange, alleging violations of the state's securities laws. The lawsuit contends that Coinbase permitted residents of Oregon to trade unregistered digital assets, thereby breaching established regulatory standards. The case was filed in Multnomah County Circuit Court, where Coinbase is accused of facilitating unsafe investments through its platform without adequate consumer protections.

The legal complaint highlights the Internet Computer Protocol (ICP) cryptocurrency as a key example. The ICP token experienced a dramatic price drop from $700 to approximately $7 per token after being listed on Coinbase. This significant price reduction is cited as evidence that Coinbase enables the trading of unregistered securities, exposing users to potential risks such as fraudulent market manipulation and pump-and-dump schemes.

As the leading U.S. cryptocurrency exchange, Coinbase controls the addition of tokens and executes trades while promoting digital assets to its users. Oregon's legal argument posits that these activities involve unregistered securities, which can lead to market volatility and financial losses for investors. The state is seeking financial compensation for affected investors and advocating for stronger consumer protection measures.

This lawsuit follows a previous case brought by the U.S. Securities and Exchange Commission (SEC) in February 2025, which was ultimately dismissed. The SEC had initially charged Coinbase with allowing the trade of thirteen tokens that it claimed should have been classified as securities. The Oregon state lawsuit echoes these allegations, asserting that Coinbase's lack of required disclosures to customers resulted in dangerous market conditions.

In response to the lawsuit, Paul Grewal, Coinbase's chief legal officer, argued that the legal challenge is merely a rehash of the SEC's failed case. Grewal contended that since the SEC had dismissed the matter with prejudice, any attempt to refile it is futile and a waste of state resources. Coinbase maintains that digital currencies are commodities rather than securities and that its operations comply with all existing regulatory standards. Grewal criticized the state for focusing on enforcement rather than establishing clear regulatory frameworks for cryptocurrency businesses.

The legal dispute occurs amidst ongoing discussions about cryptocurrency oversight. The Trump administration had allowed the SEC to exercise gentler enforcement against cryptocurrency platforms like Coinbase and Kraken. The legal action in Oregon reflects growing disagreements between state and federal leadership in digital asset regulation. The state's legal filing underscores how investors lost money while Coinbase earned transaction fees, citing the ICP token as a notable example where market value declines after listing on Coinbase resulted in billions in investor losses.

The Department of Justice in Oregon presents the lawsuit as a strategy to protect consumers from unregulated market operations. The state argues that Coinbase's listing and promotion of cryptocurrencies create dangerous trading conditions that lack proper regulatory safeguards. The 171-page legal complaint outlines how Coinbase operates its platform by managing funds and executing unregistered security trades, which Oregon believes violates state securities regulations due to the lack of proper registration and public disclosure.

Despite the ongoing legal situation, Coinbase has continued its operations in Oregon, asserting that it adheres to all legal requirements. The exchange has relied on multiple federal court rulings, including Judge Failla’s approval of mid-case appeals in the SEC’s lawsuit, to build its defense. The lawsuit serves as a response to federal authorities' insufficient regulatory oversight, prompting Oregon to take action due to the resulting regulatory gap.