Coinbase Faces Illinois Lawsuit Over Biometric Data Collection

Coinbase, a leading cryptocurrency exchange, is currently embroiled in a legal battle with several of its users from Illinois. The lawsuit, filed on May 13th, alleges that Coinbase's identity verification process violates the state's Biometric Information Privacy Act (BIPA). The plaintiffs, Scott Bernstein, Gina Greeder, and James Lonergan, claim that Coinbase collects facial recognition data from users to satisfy Know Your Customer (KYC) requirements without providing adequate notice or consent.

The complaint asserts that Coinbase requires users to upload a government-issued photo ID and a selfie, which are then sent to third-party facial recognition software for scanning and extraction of facial geometry data. According to the plaintiffs, Coinbase did not inform users about the collection, storage, or sharing of their biometric data, nor did it disclose the purpose of the data collection or the retention schedule. This lack of transparency, the plaintiffs argue, is a clear violation of BIPA, which mandates written consent and disclosure of biometric data practices.

The lawsuit seeks damages and an injunction to prevent Coinbase from continuing its alleged unlawful practices. This legal action underscores the increasing concerns about the use of biometric data in the financial industry. As more companies adopt biometric technologies for security and authentication, the risk of privacy violations and legal challenges grows. The outcome of this lawsuit could establish a precedent for how biometric data is managed by financial institutions and other industries that handle sensitive personal information.

The lawsuit also brings attention to the regulatory landscape for biometric data in the United States. While Illinois has one of the most stringent biometric privacy laws, other states lack similar legislation. This disparity creates a complex legal environment for companies operating across multiple jurisdictions. As the lawsuit progresses, it will be crucial for Coinbase and other companies using biometric technologies to stay informed about legal developments and ensure compliance with relevant laws and regulations. Failure to do so could result in significant legal and financial repercussions, as well as damage to the company's reputation.