A US federal judge has granted a stay in an ongoing lawsuit against cryptocurrency exchange Coinbase regarding its alleged use and sharing of biometric data. The pause in proceedings comes as a similar appellate court case, Nuance Communications versus Charles Schwab, could set important legal precedent for biometric privacy claims in the financial sector.
Legal Background and Key Issues
The case, filed in May, centers on Coinbase’s collection of customer faceprints for Know Your Customer (KYC) verification, which plaintiffs claim violates Illinois’ Biometric Information Privacy Act (BIPA). The suit alleges that Coinbase failed to properly notify users and shared their biometric data with third-party verification providers without consent. Under BIPA, reckless or intentional misuse of biometric data can result in damages up to $5,000 per violation, or $1,000 for negligent cases, posing significant financial risks for exchanges operating in Illinois.
Judge Sharon Johnson Coleman of the U.S. District Court for the Northern District of Illinois ruled that the stay would streamline legal proceedings, simplify issues, and not disadvantage the plaintiffs. The stay will last until the US Court of Appeals for the Seventh Circuit issues a ruling in the related Nuance Communications case, which involves voice identification technology and may clarify the boundaries of biometric privacy in the financial services sector.
Recent Coinbase Data Breach Heightens Scrutiny
The court’s decision follows a major Coinbase data breach in May, where contractors accessed user account data for bribes, leading to subsequent lawsuits alleging mishandling of personal information. The breach and current litigation underscore ongoing concerns over data protection and privacy in the crypto sector.
As legal proceedings pause, the outcome of the appellate decision could have major implications for biometric privacy compliance on crypto platforms like Coinbase. Market participants and legal experts are closely watching for clarity on user notification, data handling, and the future of biometric regulation in digital finance.
