Coinbase has taken a hard line against what it calls “patent extortion,” filing a lawsuit to challenge infringement claims brought by Dynapass Inc. and its affiliate Dynapass IP Holdings. The move follows a public statement from Coinbase’s Chief Legal Officer, Paul Grewal, who made it clear that the exchange has no plans to settle dubious claims.
“So that there’s no confusion about the Coinbase approach to patent extortion, allow me to confirm how we do things: we don’t pay out bogus claims, we sue you instead. Today was an example of that,” Grewal wrote in a post on X.
He also shared the complaint filed in federal court on September 3, 2025, with legal representation from Jones Day.
The Dispute Over Patent No. 6,993,658
The dispute centers on U.S. Patent No. 6,993,658, which covers the use of personal devices for user authentication. Dynapass claims Coinbase violated this patent by requiring two-factor authentication (2FA) for its users, a security step the exchange has enforced since at least 2018.
In a letter sent on July 18, 2025, Dynapass demanded damages and pointed to its history of winning similar cases against other companies.
Here's the full DJ complaint. Many thanks to our OC at @JonesDay. 3/3 pic.twitter.com/kvsHbhh7D8
— paulgrewal.eth (@iampaulgrewal) September 4, 2025Coinbase responded on August 1, firmly rejecting the accusation and presenting evidence to show why its practices do not violate the patent. Coinbase also noted that the patent had already expired in March 2020, and that the U.S. Patent and Trademark Office had already found one of its key claims unpatentable in 2024.
When Dynapass refused to withdraw its claims by the August 11 deadline, Coinbase escalated the matter to court.
Coinbase is asking the court to rule that it hasn’t violated the 658 patent, which itself is invalid. The company argues the patent is nothing more than the basic idea of checking a user’s identity, which doesn’t meet U.S. legal standards for a valid patent under the Supreme Court’s Alice ruling.
A Broader Industry Message
Beyond the courtroom, Coinbase’s stance is aimed at sending a message to the wider tech and crypto sectors. Patent assertion entities, often described as “patent trolls”, routinely target companies with infringement claims in hopes of extracting settlements. By refusing to pay and instead filing suit, Coinbase is positioning itself as a defender against what it sees as abusive legal tactics.
The company’s complaint also asks the court to declare the case “exceptional” under patent law, which could allow Coinbase to recover attorneys’ fees and costs. If successful, the case may embolden other firms to resist settlement pressure and challenge questionable claims head-on.
For now, the dispute heads into litigation in California, where Dynapass is based. But for Coinbase, the fight appears to be about more than one patent; it’s about drawing a line against what it views as an industry-wide problem.
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