Oregon AG Throws Down Gauntlet: Coinbase’s Federal Court Escape Route Blocked in Securities Showdown
Oregon's top prosecutor just slammed the brakes on Coinbase's legal maneuver—and the crypto giant isn't getting the federal fast-pass it wanted.
Here's the play-by-play of this high-stakes regulatory cage match.
Coinbase's Hail Mary Gets Intercepted
The AG's office isn't buying the exchange's argument that this securities case belongs in federal court. Looks like someone forgot to read the fine print on state regulators' reach.
Regulators Circle the Wagons
State securities cops keep tightening the noose—first Robinhood, now Coinbase. Guess those 'not a security' disclaimers aren't holding up in court.
One thing's clear: while crypto bros dream of decentralization, old-school regulators still call the shots. Maybe next time try compliance instead of hoping for a jurisdiction loophole?
State and federal securities law
Oregon’s lawsuit turns on a fundamental legal difference between state and federal securities law.
Even if a crypto asset does not qualify as a security under the federal Howey test, it can still qualify as a security under Oregon's state-level legal standard, known as the Pratt test.
That standard was established in the 1976 Oregon Supreme Court case Pratt v. Kross and further clarified by later cases referred to as "its progeny."
The Pratt test broadens the Howey standard by focusing on whether investors are led to expect profits primarily from the efforts of others, even if they are also somewhat involved, making it easier for Oregon to classify schemes as securities.
"Crypto firms WOULD certainly try to avoid any interpretation on securities in state enforcement as this could lead to a chaotic situation where all 50 states could start an enforcement action based on their interpretation of securities," Navodaya Singh Rajpurohit, legal partner at Web3 consulting firm Coinque Consulting, told Decrypt.
While the federal SEC has backed away from enforcement under the TRUMP administration, including dropping its lawsuit against Coinbase in February, individual states are asserting independent authority to protect investors through their own securities laws.
Coinbase removed the case to federal court in June, saying “state law claims purportedly turn on a substantial question of federal law.”
However, Oregon's motion says this fails because the state applies its own "modified" legal test that differs significantly from federal standards.
Coinbase has dismissed Oregon’s lawsuit as political theater, with the exchange's chief legal officer claiming the Oregon AG "still thinks it’s 2023 with his Gensler-era SEC copycat suit" in a tweet Thursday. "This pursuit of a patchwork of state regulation only helps politicians and harms consumers," Grewal added.
In most place it's 2025. But the Oregon AG still thinks it's 2023 with his Gensler-era @secgov copycat suit. Yesterday he asked the federal court to send the case back to his home state court. This pursuit of a patchwork of state regulation - especially against the historic…
— paulgrewal.eth (@iampaulgrewal) July 3, 2025
The motion also accuses Coinbase of working "closely with crypto issuers to list their tokens on the Coinbase platform and promote them, facilitating their sale to the public."
Oregon has requested attorney fees and costs, noting Coinbase "lacked an objectively reasonable basis for seeking removal."
"If all states start to interpret what qualifies as an investment contract, it would cause a disastrous effect on the whole industry and could certainly undermine the SEC's role,” Rajpurohit said.
However, he noted that state courts remain bound by their own Supreme Court precedents, meaning "the Oregon District Court may have to interpret 'investment contract' as per Pratt vs Kross."
