German regulator investigating Worldcoin’s biometric data use

Sam Altman’s Worldcoin Token Launches

The Bavarian State Office for Data Protection Supervision (BayLDA) is investigating OpenAI CEO Sam Altman’s Worldcoin project due to concerns over processing sensitive biometric data at a large scale.

The recently launched Worldcoin requires users’ iris scans for a World ID, which serves as “proof-of-personhood.” It offers free tokens in some regions if users take part in the scanning process.

“This lets you prove you are a real and unique person online while remaining completely private,” wrote Altman in a blog post about the World ID.

BayLDA president Michael Will said his agency began investigating Worldcoin in November 2022. Will cited concerns about Worldcoin’s extensive handling of “sensitive data” as a reason for the probe. He also pointed out that Tools for Humanity, the company behind Worldcoin, has a subsidiary in the jurisdiction.

“These technologies are at first sight neither established nor well analyzed for the specific core purpose of the processing in the field of transferring financial information,” said Will.

He explained that the technology raises several concerns, including whether users give explicit consent for their highly-sensitive biometric data to be processed based on “sufficient and clear” information.

On July 28, the French privacy regulator, the National Commission on Informatics and Liberty (CNIL), collaborated with its German counterpart to begin probing Worldcoin due to concerns about its data collection and storage practices.

“The legality of this collection seems questionable, as do the conditions for storing biometric data,” said the CNIL.

In the U.K., a similar investigation is being conducted by The Information Commissioner’s Office (ICO). An ICO spokesperson acknowledged the project’s launch and mentioned that the regulatory body would further look into its operations.

Worldcoin uses Orb for iris scanning

Worldcoin went public on July 24. In conjunction with the launch, the developer introduced 1,500 physical Orbs — a wide-angle device equipped with telephoto cameras that scan iris — in global cities.

The scanning process begins with a staff member asking for the user’s consent. After the scan, the user then receives a World ID that is Orb-verified.

According to Altman, the project is rapidly adding around eight users per second through Orb scanning. The Worldcoin Foundation previously said it would install more Orbs in crypto-friendly jurisdictions. Notably, the Orb has not been introduced in the U.S. due to regulatory uncertainties.

Tokenomics gain criticisms

Worldcoin’s utility token, WLD, aims to give users control over the system’s direction. Yet, people have raised concerns about the project’s tokenomics. They question how the project plans to unlock most of its 10 billion WLD tokens over the next 15 years.

Chris Blec, a crypto advocate, criticized Worldcoin for exploiting people’s lack of critical thinking to exchange their biometric data for a low-value cryptocurrency.

Ethereum co-founder Vitalik Buterin also expressed concerns about potential abuses within the system, particularly about privacy, centralization and security.

Worldcoin’s WLD token experienced a significant drop of over 25 percent last week, falling to $2.19. Before the drop, The token surged to $3.58 on crypto exchanges but dropped to $1.92 before rebounding.