Coinbase, the go-to crypto hub for millions, got caught red-handed in a privacy scandal that hits you where it hurts. A bombshell class-action lawsuit, filed in Chicago, claims the platform secretly hoarded users’ face data without consent, violating Illinois’ strict biometric laws. Translation: That quick selfie you snapped for KYC checks? It might’ve been turned into a “faceprint” stockpile you never approved.
For everyday traders and crypto rookies, this isn’t just drama, it’s a wake-up call. If the allegations stick, your biometric data could’ve been mishandled for years, leaving you vulnerable to identity theft (you can’t reset your face like a password!). Worse, it cracks open a bigger question: How many exchanges are gambling with your privacy behind those slick apps? Trust just got way harder to HODL.
The lawsuit: breaking down the claims
Three Illinois residents, Scott Bernstein, Gina Greeder, and James Lonergan, are leading the charge, arguing Coinbase’s identity checks crossed a line. Under BIPA, companies must get written consent before collecting biometric data (like face scans), explain how they’ll use it, and outline when they’ll delete it.
But here’s the rub: When users sign up for Coinbase, they’re prompted to upload a government ID and a live selfie. Third-party vendors like Jumio and Onfido then analyze facial geometry—think measuring the gap between your eyes or the slope of your nose—to create a unique “faceprint.” The plaintiffs say Coinbase never clearly warned users it was hoarding this biometric goldmine or got their explicit OK.
Why this matters for crypto
Coinbase faces a lawsuit that could set a precedent for how crypto platforms handle user privacy. The severe penalties imposed by BIPA are $1,000 for careless violations and $5,000 for deliberate violations. Even for a company that reported $6.3 billion in revenue in 2024, the potential harm could reach billions, posing an existential threat to its millions of users.
The ramifications, however, go beyond penalties. Crypto’s always danced between decentralization and playing by regulators’ rules. Now, this case throws gasoline on the fiery debate: KYC rules (meant to stop fraud and money laundering) versus your right to privacy. If Coinbase loses, exchanges might have to overhaul their ID checks overnight. That could mean slower sign-ups—or worse, users fleeing to sketchier platforms with fewer guardrails. Pick your poison.
The arbitration twist
In March 2024, more than 10,000 users filed arbitration demands against Coinbase, which ultimately led to legal action. But when Coinbase refused to pay the necessary fees, the proceedings came to a standstill, and in April 2025, the American Arbitration Association (AAA) closed the cases. The class-action lawsuit, which charges Coinbase with “stonewalling” accountability, was made possible by this.
What’s next for Coinbase and crypto?
Legal experts say the case hinges on two questions:
1. Does a faceprint qualify as a “biometric identifier” under BIPA? Courts have previously ruled that even digital scans of facial geometry count.
2. Did Coinbase knowingly bypass consent? The plaintiffs claim the exchange buried vague references to biometric data in its privacy policy without clear disclosures during onboarding.
Coinbase has yet to publicly respond to the allegations. A loss could force it to delete illegally collected data, revise its KYC process, and pay hefty damages. It also puts other crypto firms on notice: As regulators scrutinize the sector, user privacy is no longer an afterthought.
The bigger picture: privacy vs. innovation
This lawsuit is part of a broader clash between tech innovation and privacy rights and not just about Coinbase. Illinois’ BIPA has already ensnared Meta and Google in billion-dollar settlements. Now, crypto is in the crosshairs.
For users, the takeaway is clear: Always read the fine print when handing over personal data, even to trusted platforms. For the industry, it’s a wake-up call, and how Coinbase navigates this battle could reshape crypto compliance and determine whether your selfie becomes the next frontier in data rights.
