US Court Grants Brief Stay in Coinbase Lawsuit Involving Biometric Data
A significant development has emerged in the ongoing legal battle between cryptocurrency exchange Coinbase and a group of Illinois residents who claim the company violated the state's Biometric Information Privacy Act (BIPA) by collecting and sharing their biometric data without consent.
On Thursday, an Illinois judge, Sharon Johnson Coleman, granted a motion to stay proceedings in the lawsuit pending a ruling from the US Court of Appeals for the Seventh Circuit. The decision aims to simplify the issues and streamline the trial, ultimately reducing the burden of litigation on the court and the parties involved.
The request for a stay was filed by Coinbase, seeking to delay the proceedings until the appellate court renders a decision in a similar case involving Nuance Communications supplying voice identification technology to Charles Schwab. The Nuance case has the potential to impact the Coinbase lawsuit, as it may provide insight into how courts interpret the BIPA.
"[T]he Court finds that the stay would simplify the issues and streamline the trial [...] reduce the burden of litigation on the Court and the parties [...] [and] would not unduly prejudice or tactically disadvantage Plaintiffs," said the Thursday filing granting Coinbase's motion. This suggests that the court believes a brief stay will enable them to better focus on the core issues at hand.
The lawsuit, filed in May, alleged that Coinbase's "wholesale collection" of faceprints for its Know Your Customer (KYC) requirements violated Illinois law, as users were not notified. The group of Coinbase users also claimed that the exchange shared their biometric data without consent to third-party verification providers, which was a violation of the law.
Under Illinois' Biometric Information Privacy Act, private entities that violate the law in a "reckless" or "intentional" manner may be required to pay damages up to $5,000 for each instance, as well as $1,000 for each negligent violation. The plaintiffs also sought relief for litigation expenses.
Earlier this year, Coinbase disclosed that a group of customer support contractors accessed account data for users in exchange for bribes. The contractors, based in India, were later fired. However, the incident led to several lawsuits alleging that Coinbase mishandled personal data. In one notable case, individuals attempted to extort $20 million worth of Bitcoin (BTC) from Coinbase, which the company refused.
The recent stay granted by Judge Sharon Johnson Coleman marks an important development in the ongoing saga surrounding Coinbase's handling of biometric data. As the court navigates this complex issue, it remains to be seen how the decision will impact the outcome of the case and the broader implications for cryptocurrency exchanges and companies that collect personal data.