Coinbase Sued Over Face-Scan System After Ducking Arbitration

Coinbase Global Inc. collected face scans of users of its cryptocurrency platform without their consent in violation of the Illinois Biometric Information Privacy Act, a proposed federal class action said.

Lead plaintiffs Scott Bernstein, Gina Greeder, and James Lonergan alleged that Coinbase used facial-recognition technology to collect, analyze, and catalog the distances between users’ facial features as part of its user-verification system.

The Coinbase system violated BIPA because the company failed to obtain consumers’ written consent before collecting their biometric information, and failed to make public its biometric-data policies or its data-retention schedule, according to a complaint filed Tuesday in the US District Court for the Northern District of Illinois.

Coinbase also used technology from third-party providers Jumio Corp. and Onfido in its facial-recognition system, but didn’t obtain consumers’ consent before disclosing their information to them, it said.

Coinbase didn’t respond immediately to a request for comment.

Refusal to Arbitrate

The plaintiffs filed the lawsuit only after Coinbase refused to participate in arbitration of their claims before the American Arbitration Association, the complaint said.

Their attorneys filed more than 10,000 individual demands for arbitration with AAA in March and April 2024, which led to the appointment of a process arbitrator for the handling of preliminary matters, it said.

Coinbase then argued that the claimants should be required to proceed in small-claims court in Illinois and a predispute resolution process prior to arbitration, and to provide additional declarations and information, the complaint said.

The process arbitrator denied the company’s requests, and AAA determined in March 2025 that it would charge fees according to its published fee schedule rather than using the fees Coinbase attempted to impose through its arbitration clause, it said.

After Coinbase refused to pay the filing fees, AAA closed the arbitrations, leaving the plaintiffs free to pursue their claims in court, the complaint said.

The plaintiffs seek to represent a class of Illinois residents who had their biometric information collected by Coinbase during the five years before the suit was filed.

The complaint brings claims claims of violations of BIPA’s informed-consent, disclosure, and public notice provisions.

The plaintiffs are seeking liquidated damages of $1,000 per negligent BIPA violation and $5,000 per intentional or reckless violation; injunctive and equitable relief; attorneys’ fees and costs; and pre- and post-judgment interest.

Labaton Keller Sucharow LLP and Wallace Miller represent the plaintiffs and the proposed class.

The case is Bernstein v. Coinbase Glob. Inc., N.D. Ill., No. 1:25-cv-05313, complaint filed 5/13/25.