On Tuesday, the New Jersey Division of Consumer Affairs has reached a settlement with the creators of Tidbit, a software code developed for mining bitcoin.
Tidbit is a startup that was established by the students of the Massachusetts Institute of Technology (MIT) in 2013. Jeremy Rubin and his classmates designed the program to help websites increase profits by using the visitors’ computers for mining the digital currency.
According to the investigation carried out by the New Jersey Division of Consumer Affairs, the software code accessed computers in New Jersey and used their processing power without consent of their owners. The Division of Consumer Affairs alleged that the software’s creator violated New Jersey’s Computer Related Offenses Act and Consumer Fraud Act.
The process of bitcoin mining requires huge amounts of processing power, what increases the price that makes up an electricity bill. Besides, the continuous usage of computer for generating cryptocurrency can shorten its life span.
The settlement prohibits the project’s developer to access computers without obtaining permits from their owners. Moreover, is Tidbit’s creator violates the agreement within the two years, he will be charged a penalty of $25,000. Rubin has already closed the website.
“Our intent is not to stifle innovation or discourage entrepreneurs. But innovations that affect consumers must operate in compliance with the law. No website should tap into a person’s computer processing power without clearly notifying the person and giving them the chance to opt out – for example, by staying away from that website,” John J. Hoffman said in a press release.
“We do not believe Tidbit was created for the purpose of invading privacy,” Steve Lee, Acting Director from the Division of Consumer Affairs commented. “However, this potentially invasive software raised significant questions about user privacy and the ability to gain access to and potentially damage privately owned computers without the owners’ knowledge and consent. As privacy threats become more and more sophisticated, State law requires us to protect the interests and safety of New Jersey consumers.”
In December 2013, Rubin faced a subpoena issued by the New Jersey’s Division of Consumer Affairs that asked him to provide all Tidbit data, including all versions of the source code, all bitcoin wallets related to the software, all agreements with third parties, the name and IP addresses of everyone who used Tidbit, and other information. In turn, Rubin asked for help from the Electronic Frontier Foundation (EFF), which agreed to assist him. After a period of negotiations, the layers filed an official complaint in January 2014, arguing the state could not subpoena Rubin as he is not a resident of New Jersey.