Coinbase’s Legal Chief Slams States: ‘Gaslighting’ Over Prediction Markets

Ryan VanGrack, Coinbase’s VP of legal (and apparent master of the dramatic flourish), has declared war on state regulators, accusing them of attempting to rewrite the Commodity Exchange Act with the subtlety of a toddler with a crayon. The stakes? Prediction markets, which VanGrack insists are not “gaslighting” but rather a delightful tangle of federal derivatives law and state-level confusion.

• Coinbase, in a valiant effort to outmaneuver Connecticut, Illinois, Michigan, and Nevada, has filed lawsuits after launching prediction markets with Kalshi. One imagines the states responded with cease-and-desist letters penned in all caps, as if the Constitution itself were a typo.
• VanGrack, with the urgency of a man who’s just discovered his bath is cold, argues that customers now face “real and imminent” threats from states that seem to believe they invented contracts in the 17th century. Coinbase, predictably, seeks clarity-by way of federal court, where the real drama unfolds.

The crux of the argument, as VanGrack sees it, is that states are misreading the rulebook with the enthusiasm of a pirate deciphering a treasure map. He scoffs at Illinois’ claim that the CFTC is too busy regulating multi-trillion-dollar derivatives markets to spare a glance at sports event contracts. “Gaslighting,” he declares, as if the phrase alone might settle the matter.

• The CFTC, he notes, has been diligently policing derivatives since before millennials learned to spell “Bitcoin.” Recent insider trading reminders, he suggests, prove the agency is neither asleep at the wheel nor in a state of existential dread.
• The battle lines are drawn between federal and state authority, a clash as old as the republic itself. VanGrack insists the Commodity Exchange Act grants the CFTC exclusive jurisdiction over swaps and derivatives, a point states are apparently trying to ignore by sheer force of will.

Coinbase further distinguishes its exchange-traded contracts from traditional sportsbooks, a distinction as clear as mud. On Kalshi, prices are set by buyers and sellers; in sportsbooks, odds are set by operators who presumably once bet on a horse named “Sure Thing” and lost their shirt. VanGrack, ever the pragmatist, points out that no one claims the CFTC regulates sportsbooks-but then, why should it?

• The broader crypto wars loom in the background, where states cling to consumer protection powers like a child with a favorite blanket. Yet, as VanGrack dryly observes, subjecting derivatives to 50 state regulators would be “a patchwork of chaos,” a phrase sure to resonate with anyone who’s tried to navigate interstate highways.
• Congress, in its infinite wisdom, opted for a unified federal framework for derivatives. Prediction markets, VanGrack insists, should follow suit-or at least stop pretending they’re a new genre of legal puzzle.