Oregon's Attorney General, Dan Rayfield, has initiated legal action against Coinbase, a major U.S. cryptocurrency trading platform. The lawsuit, filed in Multnomah County Circuit Court, charges Coinbase with breaching the Oregon Securities Law by facilitating the promotion and sale of unregistered cryptocurrencies to Oregon residents. According to the lawsuit, this activity has resulted in numerous Oregonians suffering substantial financial losses, while Coinbase has profited through transaction fees.
"After building trust with Oregon consumers, Coinbase sold high-risk investments without them being properly vetted to protect consumers," said Rayfield. "Oregonians lost money, and we believe Coinbase should be held accountable and take steps to protect consumers."
The complaint outlines that Coinbase managed an exchange that endorsed the sale of these unregistered securities, playing an active role in listing, promoting, and facilitating trades of digital assets. Furthermore, the complaint raises concerns about the susceptibility of these unregistered securities to fraudulent activities like pump-and-dump schemes, which frequently lead to investor losses, benefiting insiders.
One specific instance highlighted in the lawsuit involves the Internet Computer Protocol (ICP) cryptocurrency. Previously labeled by the SEC as an unregistered security, the price of ICP dramatically fell from $700 to $72 shortly after being listed on Coinbase, eventually reaching around $7, equating to a nearly 99% loss.
This action from Oregon follows the Securities and Exchange Commission's recent decision to discontinue its case against Coinbase, as well as reassignment of the lead attorney formerly handling the case. Attorney General Rayfield emphasized the importance of state intervention, citing a perceived abandonment of such enforcement actions by federal regulators under the current administration.
"I am committed to protecting Oregon’s investors so they’re not taken advantage of," affirmed Rayfield.