Coinbase Faces Massive Lawsuit Over Alleged Biometric Data Misuse
In today’s news article, Coinmooner wants to discuss an incident triggered by a class action lawsuit against one of the world’s top three crypto exchanges, according to CoinMarketCap and CoinGecko, two major Web3 analytics platforms.
In May 2025, a class action lawsuit was filed in the U.S. District Court for the Northern District of Illinois against the crypto exchange Coinbase. The plaintiffs accused the company of violating Illinois’ Biometric Information Privacy Act (BIPA). According to the plaintiffs, Coinbase required users to upload ID documents and a selfie as part of the KYC (Know Your Customer) process. Then, the data was sent to third-party facial recognition software. The plaintiffs claim that Coinbase did not provide written notice, did not get users’ explicit consent, or informed them about how long their data would be stored or when it would be deleted, all required under Illinois law.
According to the complaint, Coinbase shared users’ biometric data with third parties like Jumio, Onfido, Au10tix, and Solaris without their knowledge. This caused outrage among some investors, who say over 10,000 users filed individual claims, but Coinbase allegedly refused to pay the arbitration fees, which led to most claims being dismissed. Now, a group of investors is asking the court to make Coinbase pay compensation: up to $5,000 per user for intentional violations of privacy law and $1,000 for negligence. They also want the company to cover legal costs and to be banned from collecting and sharing biometric data without following BIPA rules.
Thousands Accuse Coinbase of Collecting Biometric Data Without Consent
The plaintiffs stress that users never permitted Coinbase to collect biometric data during the verification process and were not adequately informed that their personal information would be shared with third parties. The complaint also says Coinbase didn’t explain what kind of data was being collected, why it was needed, how it would be stored, or whether it could be passed on to others. According to the plaintiffs, this violates Illinois’ privacy and consumer protection laws, especially since the company wasn’t transparent about how it stores and deletes biometric data.
It’s worth noting that this isn’t the first time Coinbase has faced privacy-related accusations in Illinois. In May 2023, a trader from Illinois sued Coinbase, claiming it illegally collected his facial image and fingerprints through its mobile app. That case was settled out of court in February 2025. But with these new lawsuits and growing public pressure, Coinbase, which is one of the biggest crypto exchanges in the world with over 100 million users by 2025, could face not just legal trouble but damage to its reputation, especially as regulations around digital assets and personal data in the U.S. get stricter.
These days, many large companies in the Web3 space are dealing with lawsuits, and centralized exchange Coinbase is no exception. We will continue to monitor the situation and keep our readers updated. In addition, Coinmooner wants to remind everyone that in the Web3 industry, it’s extremely important to use the most advanced protection methods to keep yourself and your funds safe from fraudulent schemes.
