A federal judge has temporarily paused proceedings in a biometric privacy lawsuit against Coinbase, pending a related appellate decision that could influence how Illinois’ Biometric Information Privacy Act (BIPA) applies to cryptocurrency and fintech companies.
Case Paused Pending Related Appeal
On August 21, 2025, Judge Sharon Johnson Coleman of the U.S. District Court for the Northern District of Illinois granted Coinbase’s motion to stay the case. The lawsuit, filed in May 2025, alleges that Coinbase collected and shared users’ facial biometric data with third-party verification providers during its Know Your Customer (KYC) onboarding process without providing the required notification or obtaining informed consent. Under BIPA, companies can face penalties of up to $5,000 per intentional violation and $1,000 per negligent violation.
The stay will remain in place while the U.S. Court of Appeals for the Seventh Circuit considers Cisneros v. Nuance Communications, a case addressing whether biometric technology vendors serving financial institutions are exempt from BIPA. Judge Coleman wrote that the pause would “simplify the issues and streamline the trial,” reduce litigation burdens, and “would not unduly prejudice or tactically disadvantage Plaintiffs.”
Broader Legal Context and Security History
The outcome of the appellate case could set a precedent that shapes compliance requirements for biometric KYC providers in financial services and cryptocurrency exchanges. Legal analysts note that a broad interpretation of the exemption could limit BIPA’s application to major segments of the fintech sector.
The biometric privacy lawsuit is one of several recent challenges for Coinbase’s data protection practices. In May 2025, the company disclosed that contractors based in India had improperly accessed user account information, leading to a $20 million Bitcoin extortion attempt. While unrelated to biometric data, the incident underscored ongoing security risks for large digital asset platforms.
Sources: Justia, Mitrade, AInvest, CoinCodeCap
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By Cass Kennedy
