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.