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Two cryptocurrency exchanges, imToken Pte. Ltd. and Marella LLC (operating as Changelly), have been hit with proposed class-action lawsuits in Illinois federal court. The lawsuits, filed by Christine Mouser and Candice Wilhelm, allege that the exchanges unlawfully collected, stored, and disclosed users' facial geometry scans in violation of Illinois' Biometric Information Privacy Act (BIPA).

Allegations of Unauthorized Biometric Data Collection

The lawsuits center on the "know your customer" (KYC) verification process, a standard procedure for new users on cryptocurrency exchanges. This process requires users to submit personal information, including their name, address, a government-issued ID, and a facial scan, to verify their identity. According to the complaints, these facial scans constitute unique biometric identifiers, which are protected under Illinois law.

Mouser and Wilhelm allege that imToken and Marella failed to obtain informed consent from users before collecting and storing their biometric data, as required by BIPA. The lawsuits claim that the exchanges did not provide clear information about the purpose of the data collection, the duration for which the data would be stored, or guidelines for its eventual destruction.

Crypto Exchanges Facial Scans Lawsuit : Risks of Biometric Data Breaches Highlighted

The complaints emphasize the risks associated with the unauthorized collection and storage of biometric data. Unlike passwords or other security measures, biometric identifiers such as facial geometry scans are permanent and cannot be changed if compromised. The lawsuits warn that if the exchanges' biometric databases were to be breached, users could face severe consequences, including identity theft and unauthorized tracking.

In the lawsuit against imToken, it is alleged that the company failed to establish and make publicly available a retention schedule for the destruction of biometric data, as required by BIPA. The lawsuit argues that imToken should have destroyed Mouser's facial geometry scan after her identity was verified and the initial purpose for collecting the data was fulfilled.

Crypto Exchanges Facial Scans Lawsuit : Legal Implications and Class-Action Status

Both lawsuits seek to represent classes of Illinois residents who had their biometric information collected by the defendants over the past five years. The plaintiffs are seeking damages, attorney fees, and a jury trial. If successful, these lawsuits could have significant implications for how cryptocurrency exchanges handle biometric data and could lead to stricter enforcement of privacy laws in the industry.

In response to the lawsuit, a spokesperson for Marella stated that the company uses a partnered service provider for KYC procedures and only after users agree to a privacy acknowledgment. The spokesperson noted that Marella is investigating the case but has not yet received any claims from the plaintiff through their support channels. Representatives for imToken and the other parties involved have not yet commented.

Mouser and Wilhelm are represented by attorneys Michael L. Fradin of Fradin Law and James L. Simon of Simon Law Co. Information regarding legal counsel for imToken and Marella was not immediately available.

As these cases progress, they will be closely watched by both legal experts and the cryptocurrency industry, given the growing importance of biometric data and privacy concerns in digital finance.