The U.S.-based digital exchange Coinbase took a major legal shot at Gov. Tina Kotek following allegations from Oregon officials that America’s largest crypto marketplace drained billions of dollars from everyday investors by failing to adequately assess risky assets.
At the center of the unfolding court saga is a lack of clarity from officials over why the state chose two law firms representing the state in an April lawsuit against the company. The firms and their employees collectively donated thousands of dollars to Oregon Attorney General Dan Rayfield’s campaign, and his Department of Justice appointed them to take the reins of the case.
Coinbase, whose global stock reached record high values on Monday, isn’t backing down. The corporation filed a public records lawsuit last week against Gov. Tina Kotek in Multnomah County Circuit Court. The wide-ranging 49-page complaint alleges state agencies and Kotek’s office failed to offer a timely response and disclose requested documents after the group’s attorneys reached out in May.
“While Oregonians were kept out of this process, plaintiffs’ lawyers from New York and Washington, D.C., hoping to reap millions of dollars in profit, appear to have driven the State’s strategy of regulation-by-ambush,” the lawsuit from Coinbase reads.
The company’s records requests sought information about Kotek’s “position on regulating digital assets” as well as communications relating to Coinbase and the firms the state retained to sue Coinbase, according to the suit. Coinbase’s attorneys seek to compel Kotek to search for the documents, create reasonable timelines and fees for production, and for Coinbase to receive attorney’s fees should it prevail.
The rebuttal comes two months after Rayfield announced a lawsuit against the crypto giant, alleging that the company violates ongoing securities law through the sale of crypto currencies or “tokens” that haven’t been registered with state or federal agencies for risk checks by analysts.
Rayfield’s suit was in response to what he called an “enforcement vacuum” after the U.S. Securities and Exchange Commission in February dropped a years-long investigation into similar allegations against the company.
The governor’s office said she doesn’t comment on ongoing litigation. A representative for the Oregon Department of Justice said the agency received “extremely broad” records requests from Coinbase which the company refused to pay for, an obligation mandated by Oregon law. Officials can waive fees if the material is in the public interest, as they often do with the media, for instance.
“Coinbase’s most recent lawsuit is a distraction from addressing the allegations of the case head-on, and yet another attempt to have Oregonians foot the bill for Coinbase’s own illegal profiteering,” said DOJ spokesperson Jenny Hansson in a written statement. “This is a malicious and common tactic — used by the likes of opioid manufacturers and big tobacco — to burden states and deter them from enforcing laws.”
But the lawsuit’s demands would effectively preclude hundreds of thousands of Oregonians from trading crypto, said Ryan VanGrack, vice president of Coinbase’s legal team. He defended the company’s suit on the grounds of public transparency.
“It is difficult to say with a straight face that someone is acting maliciously when all they seek is public records from their government,” he said in an interview.
After Coinbase reached out to Kotek’s office, the complaint says, it received denials for records citing “sensitive financial information” and “information about an individual’s health.” One letter from Kotek said the office would require over a year to handle a request and $239,958 from the requestors, a number the lawsuit says Kotek’s office refused to explain in its latest communication in June.
“Oregon stands alone”
Oregon’s lawsuit against Coinbase stands out in a federal landscape where Congress is currently advancing legislation considered far more friendly to the industry. House Republicans are set to vote this week on “crypto week” bills, including one piece of legislation that would create a framework for regulations around stablecoins, whose value is pegged to consistent currencies such as the dollar, as Reuters reported. The technology’s supporters hope it can be used to promote instant transactions.
“The Attorney General’s lawsuit implicates the hundreds of thousands of Oregonians who hold and trade digital assets — and who the Attorney General now contends engage in illegal securities transactions. In this, Oregon stands alone,” Coinbase’s lawsuit against Kotek says. “No other Attorney General has pursued these claims against Coinbase — much less without prior notice.”
Beyond the current case, the practice of hiring outside law firms raised eyebrows in the last campaign cycle, with several out-of-state firms donating to support Rayfield’s campaign. In the face of skepticism, Rayfield told Oregon Public Broadcasting in August 2024 he would ensure decisions about which law firms the state hires are made clear to the public.
This time, two law firms were brought on by the state’s Department of Justice to represent Oregon in Rayfield’s lawsuit: the Seattle-based Keller Rohrback L.L.P & D.C.-based Cohen Milstein, whose lead lawyer on the case is from New York. Neither firm responded to the Capital Chronicle’s requests for comment, but both have members who have donated to Rayfield’s past campaign.
Cohen Milstein gave two $5,000 donations that totaled $10,000 to Rayfield’s campaign, state campaign finance records show. The managing partner of Keller Rohrback gave $1,000 to Rayfield’s campaign for attorney general.
It’s not the first time Keller Rohrback represented the state. In 2023, the firm received more than $67 million in payment from the state after representing Oregon in a settlement with Monsanto, claiming what amounts to just under a tenth of the final settlement.
Hansson wrote in her statement that Rayfield is “committed to upholding Oregon’s laws and values and expects more from companies purporting to service Oregonians.” She did not respond to a question seeking explanations regarding the choice of the firms.