Well, well, well, what do we have here? Coinbase, the grand poobah of crypto exchanges, is findin’ itself in a bit of a pickle. A group of Illinois residents have decided to file a class-action lawsuit against the company, claimin’ that Coinbase has been collectin’ and sharin’ their biometric data without so much as a “howdy” or a “by your leave.”
The lawsuit, filed on May 13th, accuses Coinbase of violatin’ Illinois’ Biometric Information Privacy Act (BIPA) by capturin’ users’ facial data without proper notice or consent. Now, that’s what I call a face-off!
Consumer Fraud and Data Breach Charges
According to the complaint, users were asked to upload a government ID and a selfie as part of the sign-up process. These images were then sent to third-party facial recognition tools that analyzed facial features like geometry and faceprints. But here’s the kicker: the suit claims this was done without the users’ consent, which is a big no-no under BIPA.
“At no point during the verification process are Coinbase users asked to consent to the collection of their biometric information, notified that their biometric data will be collected by an unrelated third party, nor provided with any information about the process,” the lawsuit states.
The complaint also accuses Coinbase of transmittin’ this data to several third-party vendors, including Jumio, Onfido, Au10tix, and Solaris, without gettin’ permission from the parties. Further, the document reveals that over 10,000 individuals filed arbitration demands, but Coinbase’s refusal to pay the required fees led to their cases bein’ dismissed. Talk about a slap in the face!
As a result, the plaintiffs have charged the exchange with three claims of violatin’ state biometric privacy laws and one for consumer fraud under the Illinois Consumer Fraud and Deceptive Business Practices Act. They’re seekin’ damages of $5,000 for every reckless or intentional violation, and $1,000 for each negligent one. The group has also lodged an order to stop the alleged data practices and wants Coinbase to cover its court costs. Now, that’s what I call a tall order!
A Privacy Time Bomb
This ain’t Coinbase’s first rodeo with legal troubles. In May 2023, similar action was taken over the company’s handling of facial recognition during onboarding. Meanwhile, the exchange is also dealin’ with the fallout from a recent data breach in which customer support agents were allegedly bribed to leak sensitive customer information. That incident caused at least six separate class-action lawsuits between May 15 and May 16, with Coinbase bein’ accused of negligence, poor cybersecurity measures, and a slow response. Talk about a perfect storm!
Nanak Nihal Khalsa, co-founder of Holonym, a privacy-focused identity company, said the problem is bigger than just the platform.
“The Coinbase breach proves what we’ve known all along, KYC without zero knowledge is a privacy time bomb. You can’t collect and warehouse millions of user identities without eventually becomin’ both a target and a liability.”
Khalsa added that users shouldn’t have to give up privacy just to access crypto services. According to the specialist, the future of identity is not in storin’ data but in usin’ zero-knowledge tools that let people prove who they are without givin’ away personal details. Now, that’s what I call smart!
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2025-05-21 07:24