MIT Students Head to Court Over Bitcoin Hackathon Project

Despite the fact that they've disbanded the conceptual idea, New Jersey officials aren't backing down from their investigation into a Cambridge startup.

Tidbit logo via

Tidbit logo via

Lawyers representing the MIT students behind a bitcoin mining code created during a hackathon at the school last year will go before a judge on Monday for a motion hearing, after New Jersey officials filed a subpoena in December asking for all pertinent information relevant to the project.

Hanni Fakhoury, an attorney for the Electronic Frontier Foundation, or EFF, who is backing the founders of the bitcoin company Tidbit, which was developed by MIT sophomore Jeremy Rubin and his friends, will argue that officials from New Jersey’s Division of Consumer Affairs and Office of Consumer Protection have no business overstepping their bounds and coming after the now-defunct startup since it was founded in Massachusetts, and never got its business operations off the ground.

“While the state certainly has a right to investigate consumer fraud, threatening out-of-state college students with subpoenas isn’t the way to do it,” said Fakhoury, a staff attorney for EFF, a non-profit organization dedicated to defending the rights of internet users.

In December, Rubin and members of Tidbit were served a subpoena by the New Jersey Attorney General’s office, in connection with a special investigation led by the state’s Consumer Affairs and Office of Consumer Protection.

Officials claimed that Rubin’s project, which allowed people to replace advertisements on websites with Bitcoin mining capabilities, had the potential to breach computer security through unauthorized access and possibly violated the New Jersey Consumer Fraud Act.

Once served the paperwork asking for documentation related to hosting websites and Bitcoin wallet addresses, Rubin quickly enlisted the help of the EFF, and tried to get the request for information about Tidbit’s operations dismissed.

Lawyers from the non-profit group argued on behalf of the students that there was serious doubt New Jersey officials had the ability to use their own state laws to regulate interstate online commercial activity, and that the request was a violation of Rubin’s Fifth Amendment rights. They also said Rubin’s project was a “proof of concept,” and not fully functional.

MIT President L. Rafael Reif even stepped in and wrote a letter to the entire school community offering his unwavering and  “full and enthusiastic support” to Rubin and members of Tidbit.

“When the MIT community works together, we spot problems, analyze them, and solve them. Let’s solve this one together,” Reif wrote back in January.

But the issue pressed on, despite the fact that Rubin’s company no longer exists, and led to Monday’s court date.

Fakhoury said he will continue to press the notion that the New Jersey investigation is unfounded by pointing out that the students have disbanded their award-winning project, and have even taken down their website that gave access to the Bitcoin mining code.

Fakhoury also plans on telling the presiding judge that if the subpoena is upheld, Rubin and Tidbit must receive immunity.

Fakhoury said he is concerned about what the implications would be if the case against Tidbit and its founders moves forward in court.

“As MIT students and faculty have warned, the fear that any state can issue broad subpoenas to any student anywhere in the country will have a chilling effect on campus technological innovation beyond Tidbit,” he said.