New Jersey slaps MIT Bitcoin hackers with subpoena — and they’re fighting back

Rubin v. New Jersey

With help from the EFF, Tidbit has moved to quash the subpoena in New Jersey state court. Tidbit’s representatives argue the state has no personal jurisdiction over Rubin because he’s not a New Jersey resident, and Tidbit has no direct involvement in New Jersey — the source code isn’t stored there, and it’s not targeting New Jersey consumers in any way. New Jersey has no right to regulate out-of-state Internet activity, said EFF staff attorney Hanni Fakhoury.

“This is one of those rare circumstances where the common sense explanation also matches the legal argument,” he told us.

Not surprisingly, New Jersey disagrees.

“The state feels confident that its issuance of a subpoena in this matter will be found to be entirely legitimate, for reasons that will be detailed in its forthcoming opposition to Tidbit’s motion to quash,” Neal Buccino, a spokesperson for the New Jersey division of consumer affairs, told VentureBeat. He declined to comment further, citing the ongoing nature of the investigation.

If the court upholds the subpoena, Rubin’s lawyers have requested he receive protection under the fifth amendment, which states the no one should be compelled to be a witness against himself in a criminal case.

“He should be given immunity from criminal prosecution because the state is basically asking him to incriminate himself,” said Fakhoury.

The court is expected to set a hearing for late February where the judge will make a determination. In the meantime, Rubin and his peers are trying to focus on their studies.

“Dealing with this subpoena has put an undue amount of stress on me and my colleagues,” Rubin told us. “To have our progress be hindered by such a subpoena definitely hurt our team morale.”

Rubin declined to comment on whether they intend to move forward with Tidbit. Fakhoury seems to think they’re interested in forming a startup, however.

“I would imagine that they’d want to make this something more formalized,” he said. “After all, they won an award at the hackathon for a reason. But everything is going to basically be on hold until the subpoena is dealt with.”

Fakhoury feels confident that Tidbit has “presented the best argument,” but noted that it’s impossible to predict a judge’s determination. “Any lawyer who will give you his chances is a bad lawyer,” he said.

Phishing for evidence

Even if the subpoena is dismissed, the Tidbit case represents a worrying disparity between the tech community and government regulators. With its investigation, New Jersey is trying to protect its populace, but Tidbit never even launched a functional product.

The court should — and likely will — declare this subpoena unconstitutional and unenforceable, as Rubin’s lawyers have requested. But that won’t erase the time and resources it cost Rubin and his classmates, who should have been working toward that beta release, not battling a state regulator.

The subpoena and accompanying interrogatories issued to Rubin demonstrate that the people working for New Jersey’s division of consumer affairs have made little effort to understand what Tidbit’s software actually does. With their broad demands, they’ve placed the burden of the investigation on some college students — and they’ve done so before the students’ software is even fully functional.

Let’s hope the New Jersey court is smarter than the consumer affairs division.