Coinbase Is Once Again in Legal Crosshairs — Oregon Attorney General Dan Rayfield Has Launched a Complaint Against the Crypto Exchange

The state-level lawsuit follows the SEC's decision to dismiss a federal enforcement lawsuit against Coinbase in February

Coinbase is once again in legal crosshairs - this time in Oregon, where Attorney General Dan Rayfield has filed a complaint against the crypto exchange for allegedly selling unregistered securities to residents of the U.S. state without properly screening the risky investments to protect consumers.

The state-level lawsuit follows the SEC's decision to dismiss a federal enforcement lawsuit against Coinbase in February, part of a broader reversal on cryptocurrencies in which several digital asset enforcement cases were stalled.

According to the attorney general's office statement, states are now left to cover the enforcement gap created by federal authorities who are "giving up" and "abandoning these important cases."

Yesterday, initial news about the lawsuit broke after Coinbase Chief Legal Officer Paul Grewal took to Twitter to inform the crypto community that the Oregon AG was "resurrecting the dead by bringing a copycat case of SEC's enforcement action against Coinbase."

Coinbase has now shared a copy of the complaint filed by the Oregon AG, detailing the state’s case against the crypto exchange.

In a recent tweet, Grewal shared that crypto exchange had finally got a copy of the Oregon AG complaint.

"If there were any doubt about the motivation behind it, look no further than section 9, where it 1) omits Judge Failla’s order granting interlocutory appeal of the @SECGov case; 2) omits any mention of Judge Torres’ decision in the Ripple case; and 3) labels the Chairman of the SEC as a crypto lobbyist while also decrying the reassignment of Gensler’s lead lawyer to the IT department," Grewal said.

Coinbase CLO Paul Grewal.

Interestingly, there was no mention of Judge Torres’ decision in the Ripple lawsuit. In July 2023, Judge Torres ruled that XRP is "not necessarily a security on its face," impacting the SEC's case. The win wasn’output:s a turning point not just for Ripple but for the entire crypto industry.

Earlier this year, Judge Failla granted the SEC's motion for interlocutory appeal of Judgeynsider's order in the Coinbase case.

In February, a federal court in New York ruled that the SEC can proceed with its lawsuit against Coinbase, rejecting the crypto exchange's bid to have the case dismissed.

The SEC sued Coinbase in December 2022 for allegedly operating as an unregistered exchange, broker, and clearing agency and failing to adequately register any of the securities offered on its platform.

Among the issues raised by the SEC was the lack of screening of the digital assets listed on Coinbase's exchange to determine whether they should be registered as securities. This omission was deemed crucial, especially given the potential for substantial losses to investors if their risky investments were not adequately screened.

However, the SEC later dropped the case after securing the right to appeal part of a ruling by Judge Failla.

The agency's decision to withdraw the case came following Judge Failla's ruling granting the SEC's motion for interlocutory appeal of his prior order.

In April, Judge Failla had largely sided with Coinbase in a ruling that limited the SEC's ability to pursue its lawsuit against the crypto exchange.

Among other things, Judge Failla ruled that the SEC had waited too long to sue Coinbase over allegedly offering unregistered securities.

In May, Judge Failla granted the SEC's motion for an interlocutory appeal of that decision, allowing the agency to immediately appeal part of his prior ruling to a higher court.

Following Judge Failla’s order granting the SEC's motion for interlocutory appeal, the regulator decided to drop the case.

The SEC had argued that the case should go to trial in October 2023, but Judge Failla ruled that the case should be dismissed.

In its lawsuit against Coinbase, the SEC claimed that the crypto exchange had failed to register with the agency despite offering securities on its exchange since 2019.

The SEC also alleged that Coinbase had failed to comply with any of the SEC's rules and regulations for registering securities.

Coinbase argued that it had no obligation to register any of the digital assets listed on its exchange and that the SEC's lawsuit was an attempt to expand its regulatory authority beyond the limits set by Congress.

Coinbase also argued that the SEC had not adequately explained why it was pivoting to sue Coinbase after previously stating that it would focus on educating crypto firms about U.S. securities laws.

Earlier this year, former SEC Chair Gary Gensler said that several crypto firms had approached the agency seeking guidance on how to register their offerings, but the agency had not yet engaged in any such discussions.

In February, the SEC announced that it was opening the door for limited discussions with crypto firms about registering their offerings.

The agency said it would consider applications for "no action letters," which would provide firms with an indication that the SEC staff would not recommend enforcement action if a firm’s offering met the