Oregon AG’s Lawsuit Throws XRP Back into the Regulatory Fray

In a bold move, Oregon Attorney General Dan Rayfield has reignited the debate over XRP’s status, challenging Coinbase and the crypto industry head-on by naming XRP an unregistered security in a lawsuit against the cryptocurrency giant.

• XRP named as unregistered security in lawsuit against Coinbase
• Coinbase labels lawsuit “meritless”
• Previous 2023 ruling contradicted

The lawsuit, which also targets 31 other virtual assets including ADA, UNI, SOL, and AVAX, marks a significant escalation in the regulatory scrutiny faced by cryptocurrency exchanges. An unregistered security refers to a financial asset that hasn’t been registered with regulatory bodies like the SEC, which is required for legal trading. This legal battle over XRP is like a tug-of-war between regulators and the crypto industry, with each side pulling for their interpretation of the law.

Despite a 2023 federal ruling that declared XRP not a security when sold to retail investors on public exchanges, Oregon’s AG is pushing back. XRP is a digital asset created by Ripple Labs, known for its use in cross-border payments. Rayfield’s action seeks to classify these assets as securities, stirring the already murky waters of crypto regulation.

Coinbase, never one to back down from a fight, has responded with equal fervor. Paul Grewal, Coinbase’s Chief Legal Officer, didn’t mince words, labeling the lawsuit as “meritless” and accusing Rayfield of attempting to revive what they call “regulation by enforcement.” Grewal’s sharp tongue didn’t stop there; he took a sarcastic jab at the SEC Chairman, suggesting the lawsuit’s motives were less about regulation and more about political posturing.

“the Oregon AG was attempting to revive regulation by enforcement, accusing Rayfield of refusing to face reality and slamming the lawsuit as ‘meritless.'” – Coinbase’s statement

The plot thickens with the SEC’s recent withdrawal of its appeal against the 2023 ruling that XRP isn’t a security. This move came on the heels of former SEC Chair Gary Gensler’s departure, hinting at a possible shift in the regulatory winds. Justin Slaughter, VP of regulatory affairs at Paradigm, noted the classification of XRP in the lawsuit, adding another voice to the chorus of those watching this regulatory drama unfold.

The broader context of this legal battle reflects the ongoing tension between the crypto industry and regulatory bodies. It’s a classic David vs. Goliath story, with Coinbase standing as a symbol of the crypto industry’s push for less restrictive oversight, and the Oregon AG representing the regulatory pushback. The inclusion of 31 virtual assets in the lawsuit underscores the comprehensive approach regulators are taking to tackle potential violations in the crypto space.

Adding to the regulatory fervor, the SEC’s establishment of a Crypto Task Force in January 2025 signals an intensifying focus on the classification and regulation of cryptocurrencies. This move could lead to more coordinated efforts between federal and state regulators, potentially setting a precedent for other states to follow suit in their regulatory crackdowns.

While some argue that the Oregon AG’s lawsuit is a step towards necessary regulation, others see it as an overreach that could stifle innovation. As a long-time observer of the crypto space, I’ve seen many regulatory battles, but this one feels different. The departure of Gary Gensler and the SEC’s subsequent actions suggest a potential shift towards a more nuanced regulatory approach, which could ultimately provide more clarity to an industry in desperate need of it. The impact of these changes on the SEC’s stance regarding XRP is a topic of much discussion on Quora.

Key Takeaways and Questions:

• What is the current legal status of XRP as a security?

  XRP faces a legal challenge where it is named an unregistered security, contradicting a 2023 federal ruling that it’s not a security when sold to retail investors on public exchanges.

• How has Coinbase responded to the lawsuit by the Oregon Attorney General?

  Coinbase has fiercely denounced the lawsuit as “meritless,” accusing Oregon AG Dan Rayfield of attempting to revive regulation by enforcement.

• What impact did Gary Gensler’s departure have on the SEC’s stance regarding XRP?

  Following Gary Gensler’s exit, the SEC dropped its appeal against the 2023 ruling on XRP, hinting at a possible shift in regulatory approach.