XRP Lawsuit Targets Coinbase for Unregistered Securities

The ongoing legal saga over XRP, Ripple’s native digital asset, has taken a new turn as Oregon’s Attorney General launches a lawsuit claiming Coinbase traded unregistered securities. This lawsuit underscores a broader regulatory clash between state authorities and cryptocurrency platforms across the United States.

On April 18, Oregon Attorney General Dan Rayfield officially filed a complaint against Coinbase, alleging that the publicly traded exchange violated the state’s securities regulations by offering high-risk crypto investments to Oregon residents. According to the press release from the Oregon Department of Justice, this action aims to address what it described as a regulatory gap caused by the retreat of federal oversight during the Trump administration.

“States must fill the enforcement vacuum left by federal regulators who are abandoning these cases under the Trump administration,” the department stated.

Coinbase’s Chief Legal Officer, Paul Grewal, publicly expressed his dismay over the suit in an April 21 post on X (formerly Twitter). He was joined by Justin Slaughter, Vice President of Regulatory Affairs at crypto firm Paradigm, who noted that the legal complaint categorizes a broad range of digital assets — including XRP — as unregistered securities.

A Sweeping List of Affected Cryptos

The complaint, described informally as a “kitchen sink lawsuit,” includes a variety of well-known cryptocurrencies alongside XRP. Notable mentions include AAVE, AVAX, UNI, NEAR, and even wrapped versions of tokens like wLUNA — but curiously, not LUNA itself.

The lawsuit does not provide clear reasoning for this selective inclusion of wrapped tokens. The official complaint reads: “Coinbase—through its Coinbase Platform and Prime—has facilitated the trading of various digital assets in Oregon that are deemed to be investment contracts under state law, and therefore qualify as securities.”

Ripple and the Legal Legacy of XRP

The issue of whether XRP qualifies as a security has long been a matter of legal contention. Ripple Labs, the issuer of the token, has been embroiled in legal challenges with the U.S. Securities and Exchange Commission (SEC) since 2020. The SEC initially filed a $1.3 billion lawsuit against Ripple, accusing the firm of offering unregistered securities. That case was more recently dropped in March 2024, but experts argue that the resolution failed to deliver definitive legal clarity for the broader crypto space.

In an effort to reinforce regulatory interpretation, Oregon’s lawsuit appears to challenge any premature assumptions that assets like XRP are now in the legal clear. Prior to this legal development, Coinbase had just added XRP futures to its derivatives portfolio, signaling renewed confidence in the token’s regulatory status.

Despite this, Yarden Noy, a partner at crypto law firm DLT Law, cautioned that any ruling in the Oregon case would not establish binding legal precedent — even within the state. “It would mostly create more confusion. Like the decision in the Ripple case, it’s unlikely to make all tokens automatically tradable or non-tradable in the U.S.,” he explained.

This legal uncertainty reflects a wider trend of increasing state-level oversight, especially as federal regulators appear to scale back their involvement in cryptocurrency enforcement. States like Oregon are now stepping into the spotlight, attempting to assert authority over what they view as a deregulated market.

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Related: $2.3 Trillion Liquidity Shock: Franklin Templeton Says XRP Is Next in Line for Massive Inflows

Coinbase’s decision to reintroduce XRP on its platform and to facilitate derivative trading shows cautious optimism, but the Oregon lawsuit serves as a stark reminder that the token’s legal interpretation remains contested — even years after the Ripple legal battle began.