German Data Watchdog Probes Worldcoin Cryptocurrency Project Amid Privacy Concerns

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A German data protection agency is meticulously examining Worldcoin, a nascent digital currency project led by OpenAI CEO Sam Altman. The scrutiny arises from growing concerns about Worldcoin’s large-scale processing of sensitive biometric data, particularly iris scans.

Launched last week, Worldcoin requires users to exchange their iris scans for a digital ID. In some jurisdictions, people also receive free cryptocurrency as part of the project’s ambitious plan to construct a new “identity and financial network”. The Bavarian State Office for Data Protection Supervision, led by President Michael Will, initiated its investigation into Worldcoin in November 2022 due to anxieties about its use of biometric data.

“The project seeks to process sensitive data at a very large scale using new technology. These technologies are, at first glance, neither established nor well analyzed for their specific core purpose of processing in the context of transferring financial information,” Will told Reuters via email last Friday.

The Bavarian regulator is spearheading the Worldcoin investigation under the EU’s data protection rules because Tools For Humanity, the organization supporting Worldcoin, operates a subsidiary in Germany. One primary concern is whether users have explicitly consented to their highly-sensitive biometric data being processed based on “sufficient and clear” information.

In a statement last week, the Worldcoin Foundation, based in the Cayman Islands, told Reuters that it complies with EU rules and pledges ongoing cooperation with governing bodies’ inquiries about its privacy and data protection practices. However, Worldcoin did not immediately respond to a request for comment on the German watchdog’s investigation.

Over two million individuals have registered with Worldcoin, allowing their faces to be scanned by a distinctive, shiny spherical “orb” at sign-up sites across the globe, including in France, Germany, and Spain.

This widespread collection and storage of biometric data have raised red flags among privacy advocates. Critics warn it could escalate surveillance or disproportionately target certain demographic groups.

Michael Will added that several European supervisory authorities are eyeing Worldcoin and have requested additional information. France’s privacy watchdog told Reuters that the legality of Worldcoin’s data collection “seems questionable”. Similarly, Britain’s data regulator has declared its intent to conduct inquiries into the project.

As the world navigates the digital frontier and financial technology evolves, Worldcoin’s investigation spotlights the critical need for careful regulation and scrutiny of the use of sensitive biometric data in novel applications like cryptocurrency. The international response to Worldcoin’s practices may set important precedents for future privacy concerns in the crypto ecosystem.

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Carl Parsson is the charismatic Chief Editor of Cryptosphere, an authoritative voice in the buzzing world of cryptocurrency and blockchain technology. Born and raised in the tech hub of Seattle, Washington, Eli's interest in digital currencies was ignited during his undergraduate studies at the Massachusetts Institute of Technology (MIT).