Recent news indicates that the CEO and members of the board of Coinbase are in hot water, with a lawsuit alleging they offloaded shares in an attempt to escape facing up to $1 billion worth of losses on their stocks. It is believed that confidential knowledge was used to unload these stocks just before Coinbase revealed disappointing monetary results.
About the Coinbase Lawsuit
On Monday, May 1, an investor expressed their dissatisfaction by taking the company to Delaware Chancery Court with a lawsuit. The crux of the dispute rests on whether or not the board pursued the most advantageous option for public listing – namely with respect to bypassing an initial public offering and instead opting for direct listing. Additionally, it has been alleged that Coinbase quickly disposed of a massive $2.9 billion worth of stock without proper analysis or consideration.
An action was initiated in the Delaware legal system where a shareholder demands for the recuperation of “illegal gains” from Coinbase co-founder Brian Armstrong who, in addition to some other prominent figures connected to Coinbase as well as co-founder of venture capital firm Andreessen Horowitz.
Customer Privacy Compromised
On the first day of this working week, another court dispute resurfaced in San Francisco’s federal court, citing Coinbase’s alleged breach of Illinois’ biometric privacy regulations by collecting clients’ fingerprints and face templates.
In the lawsuit, it is suggested that Coinbase gathered facial and fingerprint data from their customers during the initial signup and login process. This was done by utilizing government-issued IDs and selfies along with a fingerprint-scanning technology.
In accordance with the resounding Illinois Biometric Information Privacy Act, prior to obtaining biometrics from customers, businesses must gain their approval. Furthermore, they must also notify customers of how long the collected information will be retained.
A formal disagreement was brought forward which asserted that Coinbase had gathered, amassed, and secured countless sets of ‘face templates’ – highly detailed geometric sketches of faces – and fingerprints belonging to an abundance of citizens in Illinois.
Coinbase is at the heart of a legal case, with the basis of being sued for allegedly collecting data from users and storing it in a manner that could leave them open to severe and unflappable privacy harms, including identity fraud if there should be a violation of security.