A federal judge in Illinois has granted Coinbase’s request to pause a lawsuit tied to the state’s Biometric Information Privacy Act (BIPA), as the outcome may hinge on a separate appellate case.
In a filing submitted on Thursday in the U.S. District Court for the Northern District of Illinois Eastern Division, Judge Sharon Johnson Coleman approved Coinbase’s motion to stay the case. The exchange is facing allegations that it unlawfully collected and shared users’ biometric data without their knowledge or consent.
The decision comes as the U.S. Court of Appeals for the Seventh Circuit reviews a related case involving Nuance Communications and Charles Schwab, which centers on voice recognition technology. The ruling in that matter could influence the path forward for Coinbase.
Judge Outlines Reasons for Stay
The court emphasized that halting proceedings would likely reduce complexity and conserve judicial resources while avoiding unnecessary burdens on both sides.
“[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,” the filing stated.
The plaintiffs, a group of Coinbase users, contend that the company’s “wholesale collection” of faceprints for its Know Your Customer (KYC) checks violated Illinois law. They further allege that biometric data was shared with third-party verification providers without approval, another potential breach of BIPA.
Legal Stakes Under BIPA
Illinois’ Biometric Information Privacy Act is regarded as one of the strongest biometric data protection laws in the U.S.
Entities found to have recklessly or intentionally violated the act can face fines of up to $5,000 per violation, while negligent violations carry penalties of up to $1,000 each.
The plaintiffs in the Coinbase case are also seeking reimbursement for litigation expenses.
Previous Data Breach Compounds Scrutiny
This lawsuit comes on the heels of other data-related challenges for Coinbase. In May, the exchange revealed that a group of contractors in India working on customer support had improperly accessed user account information after accepting bribes.
Those involved attempted to extort $20 million worth of Bitcoin from Coinbase, but the company refused to comply. The contractors were subsequently fired.
The breach triggered additional lawsuits, with plaintiffs accusing the company of mishandling sensitive personal data.
What Comes Next
The Coinbase case remains paused until the Seventh Circuit issues its ruling in the Nuance Communications matter. That decision will likely provide legal clarity on how Illinois’ biometric privacy laws apply to financial institutions and technology providers.
Depending on the appellate ruling, Coinbase could either face renewed litigation or see portions of the lawsuit dismissed.
For now, the exchange’s legal battle over biometric privacy obligations is far from over.