An Illinois judge has decided to hit the pause button on a lawsuit against Coinbase. At least for now.
Judge Sharon Johnson Coleman granted a motion from the crypto exchange to stay the proceedings. The case is on hold until an appellate court makes a ruling on a separate, but related, matter. The order was filed on Thursday in the U.S. District Court for the Northern District of Illinois.
Waiting on a Key Ruling
The whole thing hinges on a case moving through the U.S. Court of Appeals for the Seventh Circuit. That one involves Nuance Communications and Charles Schwab. Apparently, the decision there could have a big impact on this Coinbase lawsuit. The judge seemed to think it made sense to wait. She wrote that a stay would simplify the issues and lighten the burden on everyone involved. It wouldn’t put the plaintiffs at a major disadvantage, either.
But it’s not a final decision. Just a temporary halt.
What the Lawsuit is Actually About
This all started back in May. A group of Coinbase users filed a suit claiming the exchange violated Illinois’ Biometric Information Privacy Act, or BIPA. It’s a pretty strict law.
The core of the complaint is about faceprints. You know, when you have to scan your face to verify your identity for the “Know Your Customer” process? The plaintiffs say Coinbase collected these biometric scans without properly notifying people. And perhaps more seriously, they allege the data was shared with third-party verification companies without user consent.
That’s a big no-no under Illinois law.
The Potential Fallout
If Coinbase were to eventually lose this case, the penalties aren’t small. BIPA allows for damages of up to $5,000 for each reckless or intentional violation. Even negligent violations could cost $1,000 per instance. When you’re talking about a user base the size of Coinbase’s, those numbers get astronomical very quickly. The plaintiffs are also seeking coverage for their legal costs.
It adds another layer to the company’s recent troubles with data.
A Separate Data Breach Issue
This legal pause comes after Coinbase dealt with a separate data breach earlier this year. In May, the company said some customer support contractors based in India had accessed user account data after accepting bribes. They were fired, but not before trying to extort the company for $20 million in Bitcoin.
That incident sparked its own set of lawsuits, all centered on how Coinbase handles—or perhaps mishandles—user information. It’s a recurring theme lately.
For now, everyone just waits. The appellate court’s decision in the other case will likely determine what happens next. It could set a precedent that makes this whole case moot, or it could green-light the plaintiffs to move full steam ahead. Only time will tell.
