US Court Halts Coinbase Biometric Data Lawsuit — What This Means for Crypto Privacy

Coinbase just scored a legal breather—but the privacy storm isn't over.

A US court hit pause on the biometric data lawsuit targeting the crypto giant, buying time in a case that questions how exchanges handle user identity. No fines, no admissions—just a temporary stay while both sides regroup.

Why It Matters: Your Face, Their Data

Biometrics are the new battleground in digital finance. Coinbase, like others, uses facial scans and fingerprints to verify users—standard practice, until regulators cry foul. The lawsuit claims the exchange collected data without proper consent, a violation in several states.

Legal Limbo: What’s Next?

The stay doesn’t kill the case. It delays it. Coinbase now has room to negotiate or prepare a defense, while plaintiffs gather more ammo. Expect motions, counters, and maybe a settlement—because when has a big tech company ever enjoyed a courtroom?

Privacy vs. Progress: Crypto’s Tightrope

Exchanges walk a fine line: comply with KYC laws, but don’t creep out users. Fail, and you’re either fined or flamed online. Coinbase’s win here is procedural, not moral—and the market’s watching. After all, nothing says 'trust' like a lawsuit over your selfies.

Closing Thought: In crypto, your identity is both your key and your liability. Maybe that’s why Satoshi stayed anonymous—and why Coinbase might wish it had, too. (Hey, at least they didn’t try to tokenize your fingerprints. Yet.)

How Another Case Could Decide The Outcome Of Coinbase Lawsuit

According to an August 21 filing in the US District Court for the Northern District of Illinois Eastern Division, Judge Sharon Johnson Coleman approved a motion submitted by Coinbase to stay a lawsuit accusing the exchange of violating the state’s Biometric Information Privacy Act. The motion asked the court to wait for a ruling from the US Court of Appeals for the Seventh Circuit on a similar case.

The Court of Appeals case involves Nuance Communications and Charles Schwab, with the intricacies around supplying voice identification technology forming the foundation of the legal battle. The decision from this particular lawsuit could set precedent for how BIPA affects financial service providers, including cryptocurrency exchanges.

The court document read:

[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 lawsuit, filed in May 2025 by a group of users, accused Coinbase of the “wholesale collection” of biometric data for its Know Your Customer (KYC) requirements without notifying the users, thereby violating the Illinois law. The plaintiffs also alleged that the crypto company inappropriately shared the faceprints with third-party verification providers. 

Under Illinois’ Biometric Information Privacy Act, private firms or organizations can face damages of up to $5,000 for each instance of reckless or intentional violation of the law and $1,000 per negligent violation of the BIPA. The plaintiffs also sought relief to cover their legal costs.

Coinbase Under Pressure From Data Security Breach

Due to a separate incident, Coinbase has been under scrutiny over the security of customer data. The crypto company revealed in May that a group of customer support contractors in India accessed account data for users in exchange for bribes.

While the customer contractors were eventually dismissed, the individuals behind the data breach tried to extort $20 million in Bitcoin from Coinbase. Ultimately, this incident has put Coinbase under pressure and called into question its process of handling personal user data.