US court approves settlement against Binance, firm to pay $2.7B to CFTC

December 18, 2023 Coin Telegraph

Coinbase faces suit over alleged privacy violations in biometrics collection

May 2, 2023 Coin Telegraph

The proposed class action lawsuit alleges the exchange violated privacy laws in Illinois when it collected and stored users' fingerprints and facial scans.

Coinbase violated biometric privacy laws in Illinois through its collection and storage of customer fingerprints and facial templates, a proposed class-action lawsuit alleges.

A May 1 filing in a California District Court by a Coinbase user claimed the exchange's requirement that a customer uploads pictures of a valid ID and a self-portrait in order for the firm to conduct Know Your Customer (KYC) checks is violating certain provisions of Illinois’ Biometric Information Privacy Act (BIPA).

The lawsuit argues BIPA required Coinbase to gain permission from users when collecting their biometrics. Coinbase needed to also provide the purpose for collecting such data, how long it would be stored, how it would be used and how Coinbase would permanently destroy it.

“Coinbase had no written policy, made available to the public, establishing a retention schedule and guidelines for permanently destroying biometric information,” the suit argued.

*Coinbase user Michael Massel filed the suit on May 1, demanding a jury trial. Source:* *CourtListener*

In a similar process used by other exchanges, the suit says Coinbase scans the photographs and creates a biometric template of a user’s face. It uses the information to confirm a match between the self-portrait and the face on the supplied ID.

“Thousands” of “highly detailed geometric maps of the face” and fingerprints from Illinois residents are claimed to have been illegally collected and stored by the exchange.

Biometric authentication, such as a fingerprint or face scan, is also used on Coinbase’s mobile app to verify the user when logging into their account, the suit states.

It was alleged Coinbase’s “collection, obtainment, storage, and use” of such data is “unlawful” and exposes users “to serious and irreversible privacy risks.”

“If Coinbase’s database containing facial geometry scans or other sensitive, proprietary biometric data is hacked, breached, or otherwise exposed, Coinbase users have no means by which to prevent identity theft.”

The filing asserted that Coinbase should have “permanently destroyed” biometric data after a user opened a Coinbase account, as such information was used for the sole purpose of opening the account.

The suit is seeking damages of $5,000 per intentional BIPA violation or $1,000 if the court finds the alleged violations were not wilful along with paying the attorneys fees and court costs of the class action.

Cointelegraph contacted Coinbase for comment but did not receive a response by publication.

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‘Unworkable’ bill to ban blockchain immutability is introduced in Illinois

February 20, 2023 Coin Telegraph

Alter

Florida-based lawyer Drew Hinkes described the bill as “the most unworkable state law” related to blockchain and cryptocurrency that he has ever seen.

A recently introduced Illinois Senate Bill has been ridiculed by the crypto community over its "unworkable" plans to force blockchain miners and validators to do "impossible things" — such as reversing transactions if ordered to do so by a state court.

The Senate Bill was quietly introduced into the Illinois legislature on Feb. 9 by Illinois Senator Robert Peters but appears to have been only recently noticed by Florida-based lawyer Drew Hinkes who discussed the bill in a Twitter post on Feb. 19.

The bill titled the “Digital Property Protection and Law Enforcement Act,” would authorize the courts — upon a valid request from the Attorney General or a State's Attorney that is made pursuant to the laws of Illinois — to order a blockchain transaction that is executed via a smart contract to be altered or rescinded.

The act would apply to any "blockchain network that processes a blockchain transaction originating in the State."

*Senator Robert Peter’s bill to ban immutability on blockchains. Source:* *Illinois General Assembly.*

Hinkes described the bill as “the most unworkable state law” related to blockchain and cryptocurrency that he has ever seen.

"This is a stunning reverse course for a state that was previously pro -innovation. Instead we now get possibly the most unworkable state law related to #crypto and #blockchain I’ve ever seen," he said.

The bill states that any blockchain miners and validators may be fined between $5,000-10,000 for each day that they fail to comply with court orders.

While acknowledging the need to implement bills that strengthen consumer protection, Hinkes said it would be “impossible” for miners and validators to comply with the bill proposed by Senator Peters.

SB1887 focuses on consumer protection (this is GOOD). But, the manner in which it seeks to protect consumers is to require #node operators ##miners & #validators to do impossible things, or things that create for themselves new criminal & civil liability at pain of fines/ fees /3
— Drew Hinkes (@propelforward) February 19, 2023

Hinkes was also shocked to see that “no defense” would be available to miners or validators that operated on a blockchain network that “has not adopted reasonable available procedures” to comply with the court orders.

The bill also appears to mandate "any person using a smart contract to deliver goods and services" to include code in the smart contract which can be used to comply with court orders.

“Any person using a smart contract to deliver goods or services in this State shall include smart contract code capable of enforcing court orders regarding the smart contract.”

If you thought that was bad. Get ready to #Illinoize your blockchain! Yes, #Illinois is going to force you to re-write your blockchain- specifically by including smart contract code capable of responding to court orders. And if you don’t, you can be sued /10
— Drew Hinkes (@propelforward) February 19, 2023

Other members of the cryptocurrency community have responded with similar ridicule of the bill proposed by Peters.

Crypto analyst “foobar” noted to his 120,800 Twitter followers on Feb. 19 that court ordered transactions would need to — somehow — be amended “without needing the private key” of the participants, which he considered to be “hilarious.”

this is hilarious, Illinois is proposing a bill that would make miners & validators “respond to a court order by including transactions on the blockchain without needing the private key”

why are you refusing to comply, transfer satoshi’s bitcoin to governor pritzker! off to jail https://t.co/7JcpktWMgH pic.twitter.com/FPKLsFNE3e
— foobar (@0xfoobar) February 19, 2023

Gabriel Shapiro, lawyer and general counsel at investment firm Delphi Labs explained very briefly to his 34,100 Twitter followers on Feb. 19 that the bill would essentially try to ban immutability on blockchains:

TLDR--they are trying to ban immutability https://t.co/HSg00pcFHx
— _gabrielShapir0 (@lex_node) February 19, 2023

Meanwhile, Carla Reyes, assistant professor at Southern Methodist University School of Law in a Feb. 19 tweet, stated that lawmakers should only introduce bills if they understand how the technology works.

While immutability is a common property in blockchains and distributed ledgers, the Peters-sponsored bill explained that such networks lack an enforcement mechanism that can be tapped into by the courts:

“As a result, the cost to enforce legal rights in digital property is often prohibitive such that the property rights cannot be vindicated and the vast majority of blockchain crimes go unpunished.”

Fraud and mistake would be two of the most commonly used cases where Illinois courts may order for a blockchain transaction to the victim or original sender, the bill noted.

The bill also wants to help users recover their assets if they lose their private keys.

While the bill was only introduced on Feb. 9, it will need to be "read" and voted in by three separate committee hearings before being passed on to Illinois Governor Jay Pritzker to officially sign the bill into law.

The first reading took place on the same day it was introduced into the Illinois General Assembly by Peters.

If it is ever passed, the contents of the bill would take effect 30 days after becoming law.

Illinois