WorldCoin, a cryptocurrency startup co-founded by OpenAI's Sam Altman, has been allowed to resume iris scanning and other operations 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 system, which the company 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 cryptocurrency startup in July last year, citing concerns about the “credibility and legality” of its security, financial services and data protection.
Meanwhile, a parliamentary committee set up in response to the suspension recommended the operation 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.”
It further said that 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. It also said that WorldCoin failed to obtain approval from the ICT regulator to use Orb, which it claims is a communications device, in the country.
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 case to a close,” said Thomas Scott, Chief Legal Officer at Tools for Humanity. “But this welcome outcome is only the beginning, not the end. We will continue to work with the Kenyan government and others to 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.
The only country in Europe where Orb is currently listed is Germany. However, that could change. We understand that the Bavarian data protection authority is currently investigating the company and a decision could come as soon as next July. Bavaria is leading other GDPR investigations because that is where Tools for Humanity is based. Even in Spain, where Worldcoin has suspended operations, the company has agreed not to reopen until the Bavarian DPA's investigation is over.
Meanwhile, Portugal's Data Protection Authority is conducting a separate investigation, focusing on the company's U.S. subsidiary.
Meanwhile, Italy has already warned the company to refrain from any launches.
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 relevant websites” until the country had established appropriate regulations for virtual assets, in April Kenya also appeared to have begun taking steps towards a more formal process for evaluating 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.