WorldCoin, a cryptocurrency “proof of character” startup co-founded by OpenAI’s Sam Altman, has been given the go-ahead to resume operations such as iris scanning in Kenya after a year-long government investigation into privacy concerns was halted.
Kenya was one of the countries where WorldCoin launched its iris scanning scheme (which the startup was building as the basis for a new identity and cryptocurrency system), but its operations there have been suspended for nearly a year after the program fell foul of regulators just days after it was launched.
Now, the country’s Directorate of Criminal Investigation (DCI) has issued a letter to the company’s legal team dated June 14, informing them that “the investigation has been concluded and no further action will be taken by police.”
However, the firm also urged crypto startups to formally register their businesses, obtain necessary licenses, and vet vendors for “prudent continuing operations.”
The letter caps a nearly year-long suspension and investigation into WorldCoin’s activities. Kenya suspended WorldCoin’s registration shortly after the crypto startup launched in July last year over concerns over the “reliability and legality” of its security, financial services and data protection.
Meanwhile, a parliamentary committee set up in response to the suspension recommended the business be shut down completely after conducting its own investigation and finding numerous violations.
Specifically, it found that WorldCoin and its subsidiary company Tools for Humanity had violated Kenyan regulations on data protection, consumer protection, computer misuse and cybercrime, and concluded that its activities “constituted espionage and constituted a threat to the nation state.”
Additionally, it said WorldCoin, Tools for Humanity Corp. (USA) and Tools for Humanity GmbH (Germany) are not registered companies in Kenya and that its local partners were not registered as data processors or controllers despite collecting data on behalf of the crypto project. WorldCoin also said it had not received approval from ICT regulators for the local use of its allegedly communications device, eye-scanning hardware (also known as “orbs”).
It is not yet clear what future impact the parliamentary committee’s closure recommendation will have.
“We thank the DCI for their fair investigation and the Director of Public Prosecutions’ determination to bring this matter to a close,” said Thomas Scott, Tools for Humanity’s Chief Legal Officer. “But this welcome outcome is only the beginning, not the end. We will continue to work with the Kenyan government and others and hope to reopen World ID registrations across the country in the near future. Today we are pleased to refocus on advancing WorldCoin’s mission to create opportunities for people in Kenya and beyond to participate in the global economy.”
It is also important to note that WorldCoin and Tools for Humanity are still facing numerous ongoing investigations in other countries.
Germany is currently the only country in Europe where “Orb” is listed as available. However, that could change. The Bavarian Data Protection Authority (DPA) is currently investigating complaints about WorldCoin and we understand that a decision could come as soon as next month (July). Bavaria has led other GDPR investigations because of where Tools for Humanity is based. WorldCoin suspended operations in Spain following a DPA order earlier this year, but has agreed not to resume them pending the outcome of the Bavarian DPA’s investigation.
Meanwhile, Portugal’s DPA is investigating the complaints separately, focusing on the company’s US entities, and has banned WorldCoin from operating in the meantime.
Separately, in April, Italy’s DPA warned the company to refrain from any launches or risk sanctions.
In some ways, the entire situation around WorldCoin highlights the potential problems with the technology, but it also highlights how many jurisdictions are ill-prepared to deal with a new technology that is being rapidly adopted.
While the government committee urged Kenya to disable WorldCoin’s physical and virtual presence “including by blacklisting the IP addresses of related websites” until the country establishes appropriate regulations for virtual assets, in April the government also appeared to have initiated steps to set up a more formal process for assessing such companies, forming a multi-agency technical team to develop a regulatory and oversight framework for the use of virtual assets targeting cryptocurrency startups like WorldCoin.
