Coinbase Privacy Lawsuit: Illinois Users Fight Biometric Data Misuse

In a significant development for crypto security and privacy, Coinbase faces a new class-action lawsuit over alleged unauthorized biometric data collection, coming just days after experts warned about physical security risks from their recent data breach.

Key Lawsuit Details

Illinois residents have filed a class-action lawsuit against Coinbase, claiming the exchange violated the state’s Biometric Information Privacy Act (BIPA). The core allegations include:

• Unauthorized collection of government IDs and selfies
• Transfer of biometric data to third-party vendors without consent
• Violation of state privacy laws regarding data handling

Historical Context: Previous Legal Challenges

This isn’t Coinbase’s first encounter with BIPA-related litigation. A similar lawsuit from May 2023 resulted in arbitration, highlighting a pattern of privacy concerns.

Self-Custody Solutions: The Growing Alternative

As centralized exchanges face increasing scrutiny, self-custodial wallets are emerging as a safer alternative for crypto storage. Benefits include:

• Complete control over private keys
• Minimal personal data collection
• Enhanced privacy protection
• Reduced exposure to exchange-related risks

FAQ: Coinbase Privacy Lawsuit

Q: What is BIPA?
A: The Biometric Information Privacy Act is an Illinois law requiring companies to obtain explicit consent before collecting and processing biometric data.

Q: How does this affect Coinbase users?
A: Users’ biometric data may have been shared with third parties without proper consent, potentially compromising their privacy.

Q: What alternatives do users have?
A: Self-custodial wallets and decentralized exchanges offer more privacy-focused alternatives for crypto trading and storage.

Looking Ahead: Impact on Crypto Exchange Practices

This lawsuit could set important precedents for how crypto exchanges handle user data and privacy, potentially leading to industry-wide changes in compliance practices.