In August, a committee was assigned by the Kenyan parliament to investigate operations and activities of Worldcoin (WLD) – a controversial crypto project by Sam Altman, the founder, and CEO of artificial intelligence company OpenAI, who is now calling for it to be shut down in the country.
In a report published on September 30, the parliamentarian committee ordered Kenya’s information technology regulator, the Communications Authority, to disable Worldcoin’s physical and virtual presence, including the blacklisting of IP addresses related to its websites, until proper regulations for crypto assets were established.
Kenyan Government Suspends Worldcoin Over Privacy Concerns
Defending their action, the team of lawmakers pointed out that Worldcoin continued to collect the personal information of Kenyan residents despite being issued an order to stop operations back in August. The country’s minister of internal security, Kithure Kindiki, issued a statement on Facebook announcing that the government had suspended Worldcoin’s activities until relevant public agencies could certify that it was absent of any risk to Kenyans.
The minister stressed that the government was especially concerned with the project’s method of collecting biometric identification information, like scanning the user’s iris in exchange for a digital ID. He also warned that “appropriate action” would be taken on any person who “furthers, aids, abets” or is connected with the project. The government was concerned over the authenticity and legality of Worldcoin’s activities in the fields of security, financial services, and data protection.
The parliamentary report stated that it was difficult or impossible to identify the number of “orbs” – the devices used by Worldcoin to scan users’ irises for verification, in operation within the country. Moreover, the project also failed to get approval from the Communications Authority to use the orbs, which is considered a telecommunication device by the regulator
Worldcoin Developer and Partners Found To Have Violated Kenyan Data Protection Laws.
Calls for the investigation came after the committee found that Tools for Humanity Corporation – the developers of Worldcoin, its German subsidiary Tools for Humanity GmbH, and its Kenyan partner Sense Marketing had violated Kenya’s data protection law, consumer protection act, and computer misuse and cybercrimes act. The government said the company’s activities constituted acts of espionage and offered a “threat to statehood.”
As per the report, Worldcoin and its parent companies in the United States and Germany were not registered businesses in the country, while its local partners weren’t registered as data processors or controllers despite collecting personal data of Kenyan residents on behalf of the project.
The issue has forced the government to re-review its current legal framework. The committee has recommended the implementation of a comprehensive regulatory framework for digital assets and virtual asset service providers (VASP) in Kenya and to consider amending existing regulations for cybercrimes and tax reporting.
From here onwards, data controlling and processing companies operating in the country will be required to provide full disclosure of how they utilize and store personal and sensitive data collected from residents. The lawmakers have also called for the provision of “legislative interventions” to oversee the collection of biometric data from Kenyans, which is considered to have huge implications for privacy, security, health, and human rights.
A request was also made for establishing a board where the Office of the Data Protection Commissioner would report or provide accounts on its daily operations.
Worldcoin Facing Increased Regulatory Scrutiny Worldwide
Worldcoin was launched with the intention of finding a solution to differentiate between humans and bots online through the creation of a global financial network. The project scans the irises of its users for digital identity verification, who are then given a crypto wallet tied to their biometric data and other personal information.
During its launch in July, Worldcoin enticed users to sign up by offering them free WLD – its native token – worth 50 USD. Kenya was one of the first countries where the project was implemented. The government took notice after an influx of people gathered at Orb stations across the country for the signup bonus. The incident led to the suspension of Worldcoin iris sans in Kenya.
However, regulators worldwide are growing concerned about the project, claiming that it is circumventing data protection and user privacy laws. Authorities in Germany, France, the United Kingdom, and Argentina have launched investigations into Worldcoin’s activities.
At the time of writing, WLD is trading at $1.62 – down over 4% in the last 24 hours. The token has dropped 51.16% from the all-time high of $3.30 it reached on July 24, 2023.