Coinbase, the largest cryptocurrency trading platform in the U.S., is fighting back in court this week over what the company views as lawfare being waged against it by Oregon’s Democratic Attorney General Dan Rayfield and Gov. Tina Kotek.
In a lawsuit filed late Thursday, the company is seeking documents under the state’s public record law about an abrupt change in policy regarding cryptocurrency.
It believes the governor and other state officials changed their position on digital assets behind closed doors, without traditional hearings or time for agency rulemaking and public comment.
“Sunlight is the best disinfectant and transparency is the hallmark of good governance. Oregon A.G. Dan Rayfield is pursuing litigation that stands to make out-of-state law firms wealthy, at the expense of local residents who seek to trade digital assets,” Ryan VanGrack, vice president of litigation at Coinbase, told The Washington Times.
“So, why is Governor Kotek refusing to provide basic information about the case, including why the state suddenly flipped its views on crypto? Oregonians deserve to know why their government is keeping them in the dark — and why they’re pursuing a case that would deprive Oregonians (and only Oregonians) from trading crypto.”
Thursday’s state court filing in the Circuit Court of the State of Oregon for the County of Marion comes after the state attorney general, Mr. Rayfield, sued Coinbase in April, alleging the company is skirting state and federal law for failing to register with the U.S. Securities and Exchange Commission or the Oregon Department of Consumer and Business Services.
That case is currently in limbo, as Coinbase is looking to remove it to federal court.
In Coinbase’s lawsuit filed Thursday, the company asserts that for years Oregon state officials advised its residents that digital assets — like cryptocurrency — are “not regulated” as state securities.
But in April, it did an about-face. That is, with the help of New York and D.C. attorneys, the state sued Coinbase, claiming it is operating illegally due to not having registered.
Those out-of-state firms could reap 20% to 30% of any money recovered in the lawsuit if Oregon were to win.
“No law was passed by the Oregon Legislature to regulate digital assets,” Coinbase’s lawsuit said.
“Oregonians deserve better from their state government; they deserve answers. Coinbase files this lawsuit to vindicate those interests. Governor Kotek should be ordered to search for and produce all documents responsive to Coinbase’s public records requests without further delay.”
Oregon first targeted Coinbase just two months after the federal government dropped its SEC action against the platform. In 2023, under the Biden administration, the SEC had sued Coinbase, alleging it was operating illegally trading unregistered securities.
Oregon, it appears, sought to revive those claims in state court when they were dismissed by the new Trump administration.
“Coinbase has for years operated an illegal securities business in Oregon through its cryptocurrency trading platform and its practice of selling high-risk and unregistered securities to Oregonians,” read its lawsuit filed in April in the Circuit Court of the State of Oregon for the County of Multnomah.
No other state besides Oregon has jumped at the opportunity to sue Coinbase at this time following the SEC’s dismissal.
The legal battles between Oregon and Coinbase are pending at a time when there is bipartisan support for legislation imposing some regulations on crypto, which has for years been somewhat of the Wild West online.
Congress is expected to vote on the Clarity Act and the GENIUS Act in the coming week, which both promote transparency and regulation in the digital asset industry, setting up some requirements and guidelines to better protect consumers. GENIUS is short for Guiding and Establishing National Innovation for U.S. Stablecoins.
“No one else has filed suit. It came after the federal government dismissed its case, and it is coming on the heels of bipartisan legislation,” Mr. VanGrack said. “I can’t imagine a more illogical time for a state to peacock and insert itself when the federal government made it very clear it is their domain.”
A spokesperson from Ms. Kotek and Mr. Rayfield’s offices did not immediately respond to a request for comment about Coinbase’s records request and litigation.
