Attorney General Dan Rayfield today filed a lawsuit against Coinbase, one of the largest cryptocurrency trading platforms in the United States, for violating the Oregon Securities Law. The lawsuit claims that Coinbase has both encouraged and helped the sale of unregistered cryptocurrencies to people in Oregon. In doing so, Coinbase has reaped millions of dollars in fees as Oregonians have faced huge losses, often devastating, from risky investments in a market that’s stacked against them and hard to navigate.
“After building trust with Oregon consumers, Coinbase sold high risk investments without them being properly vetted to protect consumers,” Rayfield said. “Oregonians lost money, and we believe Coinbase should be held accountable and take steps to protect consumers.”
The complaint filed today in Multnomah County Circuit Court claims that Coinbase created and operated an exchange that drives and supports the sale of unregistered securities – or in other words, risky investments. Coinbase approves the cryptocurrencies listed on its platform, connects buyers and sellers, handles their trades, manages their funds and assets, and actively promotes and encourages Oregonians to buy these digital assets.
As detailed in the complaint, these unregistered securities are vulnerable to pump-and-dump schemes and fraud, which often end in devastating losses for investors. Meanwhile, the insiders behind these tokens profit from investors not being able to fully research their investments.
In one example, the cryptocurrency called ICP, short for “Internet Computer Protocol,” which the SEC previously identified as an unregistered security, plummeted in price from $700 to $72 within one month after it was launched for public trading on Coinbase. Today, the coin trades around $7 per share, a price drop of almost 99% that wiped out billions of dollars of investors’ money.
This lawsuit comes as the SEC recently dropped its case against Coinbase and reassigned the lawyer leading the case to the SEC’s IT office. Attorney General Rayfield says the states must fill the enforcement vacuum being left by federal regulators who are giving up under the new administration and abandoning these important cases.
“You don’t go in for a medical procedure without knowing the risks. It’s the same for everyday folks who want to invest in cryptocurrency,” said Rayfield. “I am committed to protecting Oregon’s investors so they’re not taken advantage of.”
