As XRP Seemed to Gain Clearer Federal Standing, a New Oregon Lawsuit Targeting Crypto Exchange Coinbase Stirs Fresh Concerns

As XRP seemed to gain clearer federal standing, a new Oregon lawsuit targeting crypto exchange Coinbase stirs fresh concerns about potential state-level clampdowns.

A new lawsuit by Oregon’s attorney general is targeting cryptocurrency exchange Coinbase with claims of violating the state’s securities laws, stirring fresh concerns about potential state-level clampdowns.

As reported by Law360, the lawsuit, filed last week Thursday, spans 171 pages and alleges that Coinbase enabled the sale of virtual currencies without providing “robust disclosures of material information,” a requirement under Oregon’s administrative rules. The lawsuit also criticizes the exchange for failing to register as a securities broker-dealer.

The lawsuit arises from an initiative by Oregon Attorney General Dan Rayfield to oversee cryptocurrency activity within the state, aiming to fill an “enforcement vacuum” possibly left by shifting priorities at the U.S. Securities and Exchange Commission.

However, legal experts like University of Oregon law professor Liz Tippet have characterized this patchwork state enforcement as a “suboptimal workaround” for failed federal oversight. Tippet opines that it’s a desperate measure taken due to the SEC’s inability to keep pace with the crypto sector, and ultimately, it’s no substitute for coordinated federal regulation.

The lawsuit names several crypto assets, including Bitcoin, Ethereum, and Stellar Lumens, but not XRP, which is currently involved in a separate lawsuit with the SEC.

The case will follow a federal judge’s ruling last year that XRP itself was not a security, although the judge did find that the SEC’s claims of unregistered offerings and violations of federal securities law were plausible in regards to other crypto assets sold by Ripple.

If state laws redefine or reinterpret disclosure obligations, exchanges listing XRP could still face legal consequences, even if the token is federally compliant. This dual-track legal system puts crypto assets at the mercy of both federal and state scrutiny, raising fresh concerns for developers, investors, and platforms like Coinbase.

The attorneys general of several states, including California, have expressed interest in regulating crypto at the state level, potentially leading to a patchwork of regulations across the U.S. This could create difficulties for exchanges and token issuers in maintaining compliance with varying state laws.

The case in Oregon also arrives amid a shift in priorities at the SEC, with new Chair Paul Atkins showing interest in a balanced approach to crypto regulation.

Earlier this year, the SEC Chair signaled a willingness to work with Congress on legislation for crypto regulation, an indication that the agency might be open to avenues other than sole enforcement in the sector.

This optimism is slowly returning to the market, especially with 70+ crypto ETFs, including those for XRP and Solana, pending approval by the SEC.