In more legal trouble, a Coinbase user filed a class action suit alleging that the exchange violated biometric privacy laws in Illinois by illegally collecting and storing customer fingerprints and facial templates.
According to the filing dated 1st May, the exchange has flouted several aspects of Illinois’ Biometric Information Privacy Act [BIPA] since the law mandate permission from users when collecting their images of a valid ID and a self-portrait.
Coinbase’s unlawful collection, obtainment, storage, and use of its users biometric data exposes them to
serious and irreversible privacy risks, the suit argued.
In order to open a Coinbase account in the plaintiff’s name, the exchange collected the plaintiff’s facial geometry and fingerprints, and both of these data sets were used to confirm the plaintiff’s identity when the plaintiff logged into the platform’s mobile app.
However, after opening Plaintiff’s Coinbase account, it chose to keep Plaintiff’s biometric data rather than permanently erasing Plaintiff’s facial geometry.
Furthermore, after the plaintiff logged out or stopped using the mobile app, Coinbase was supposed to permanently delete the fingerprints.
As such, its retention of Plaintiff’s biometric information was unlawful and in violation of 740 ILCS § 14/15(a), the filing alleged.
The lawsuit seeks damages of $5,000 for each intentional BIPA violation or $1,000 if the court determines the claimed violations were not willful.
At the time of reporting, Coinbase did not respond to the allegations.
Another troubling news emerged the exchange’s top executives, including CEO Brian Armstrong, and board member Marc Andreessen, were accused by investor Adam Grabski of using insider information to sell stock within days of the platform’s public listing in 2021, preventing losses of over $1 billion.
Coinbase Top Brass Accused Of Insider Trading
The filing alleged the management of the trading firm sold their shares before “material, negative information that destroyed market optimism from the company’s first quarterly earnings release forward” led to a drop in the share price.
The complaint also claimed that the board of Coinbase launched a direct listing rather than a more conventional IPO and quickly sold off $2.9 billion in stock.
Dismissing the charges, the exchange termed the lawsuit as an example of “meritless claims” in an emailed statement to Bloomberg.
The twin developments come one month after Coinbase received a Wells Notice from the US Securities and Exchange Commission [SEC] for listing unregistered securities.