Tidbit Faces Subpoena in New Jersey Investigation

Massachusetts Institute of Technology (MIT) President L. Rafael Reif released a letter to the MIT community on Feb. 15 announcing the university’s support for the student founders of a startup called Tidbit. The students have been facing legal trouble since December, when the attorney general’s office of New Jersey served Tidbit co-founder Jeremy Rubin a subpoena in connection with an investigation led by the Garden State’s Division of Consumer Affairs and Office of Consumer Protection.

“I want to make it clear that the students who created Tidbit have the full and enthusiastic support of MIT,” Reif wrote.

Tidbit rose to prominence last November, when Rubin and three fellow MIT undergraduates participated in an online “hackathon.” The startup would allow an internet user to avoid seeing displayed advertisements by lending website owners the computing power to mine for bitcoins, a type of electronic currency. The attorney general’s office feared that Tidbit may have violated the New Jersey Consumer Fraud Act by breaching people’s computers without authorization and demanded that the startup release sensitive information, including source code and hosting websites, despite the fact that the team insisted the coding was not yet functional.

In an effort to defend itself against the demands of the subpoena, the members of the Tidbit team began working with the Electronic Frontier Foundation (EFF), a non-profit that defends innovation rights in the digital world.

“The issue is the state thinks [Tidbit’s] being used for some malicious purpose, and we disagree,” said EFF staff attorney Hanni Fakhoury, according to Boston Magazine.

EFF and Tidbit’s representatives also insisted that the subpoena was unlawful, because Rubin is from Boston. “Tidbit and its developers have no connection to New Jersey at all,” Fakhoury told Boston Magazine. All of Tidbit’s developers, including Mr. Rubin, are MIT students who reside in Massachusetts. Tidbit’s servers are not physically located in New Jersey. Since the code was never functional, it cannot and has not been used to mine for Bitcoins.”

In a letter to users, the Tidbit team explained the effect that the subpoena was having on the startup: “Our development progress has been halted,” they wrote. “From what we understand, we can’t release anything or even incorporate until the subpoena has been settled … Obviously, this is a significant setback. We’re intensely frustrated and are working to resolve the situation as soon as possible.”

MIT received criticism for what members of the university’s community saw as a failure to support the students, echoing problems critics had with the university’s handling of federal charges levied against Aaron Swartz, an internet activist who committed suicide in January 2013 as a result of the legal backlash that came after he downloaded millions of journal articles using MIT’s network.

Members of the MIT community sought signatures for a letter criticizing the administration’s perceived inaction in the face of Tidbit’s troubles. “Students are being threatened with legal action for doing exactly what we encourage them to do: explore and create innovative new technologies,” wrote Hal Abelson, a computer science professor; Ethan Zuckerman, director of the Center for Civic Media at MIT; and Media Lab graduate student Nathan Matias, according to The Boston Globe.

In his letter to the community, however, Reif dispelled the notion that MIT would not support the Tidbit team as it faces legal strife. Reif wrote that the problems faced by Tidbit highlight “issues central to sustaining the creative culture of MIT.”

Reif added that MIT Chancellor Cindy Barnhart and Provost Marty Schmidt met with the students as well as EFF to discuss the case and offer assistance in the legal proceedings.

Reif insisted that, in order maintain the innovative nature of MIT’s student body, systems need to be put into place to assure that students have the assistance they need if legal troubled stem from their inventive efforts.

“Beyond this specific case, I believe we should provide our student inventors and entrepreneurs with a resource for independent legal advice, singularly devoted to their interests and rights,” Reif said. “I have asked the Provost, Chancellor and General Counsel to develop and submit to me a specific proposal for creating such a resource, which will add an essential new strength to MIT’s innovation ecosystem.”


February 20, 2014