Worldcoin Faces Ongoing Investigation by German Privacy Regulator Over Data Collection Practices

As the cryptocurrency market continues to evolve, Worldcoin, a project founded by Open AI’s Sam Altman, finds itself under investigation by one of Germany’s top privacy regulators, the Bavarian State Office for Data Protection Supervision. The investigation, which began in November 2022, is still ongoing, according to a recent report by Reuters on July 31.

At the heart of the investigation are concerns surrounding Worldcoin’s ambitious goal to process “sensitive data at a very large scale.” The project aims to establish a decentralized “identity and financial network” and recently launched on July 24, deploying 1500 physical “orbs” in cities worldwide. These orbs scan people’s eyes to create a unique Worldcoin ID, rewarding participants with 25 Worldcoin and a distinct identification on the network.

However, Europe’s strict data protection rules have raised significant concerns among privacy regulators. The German watchdog is spearheading the investigation due to the presence of Tools for Humanity, the company behind the Worldcoin project, having a subsidiary in Germany. This has also drawn the interest of other European authorities, who have sought information as the project falls under German regulator’s oversight.

Privacy regulators in the UK and France have launched their own investigations into Worldcoin, with French authorities collaborating with their German counterparts. The primary concerns revolve around the security and explicit consent for collecting sensitive biometric data, as well as the overall soundness and security of the underlying technology.

Responding to the investigation, President Michael Will of the Bavarian State Office for Data Protection Supervision expressed doubts about the technologies involved, stating they appear unestablished and inadequately analyzed for the specific purpose of transferring financial information.

In defense, Worldcoin’s website and whitepaper claim that the collected data is stored in encrypted form, and the project utilizes zero-knowledge proof technology for verification. Previously, Worldcoin assured CryptoSlate that it was fully compliant with European data rules and subject to supervision by the Bavarian State Office for Data Protection Supervision. However, it remains uncertain if the project was aware of the ongoing investigation.

As of press time, Worldcoin and Tools for Humanity have not responded to requests for comments regarding the investigation.

While the situation poses challenges for Worldcoin, the ongoing developments in the cryptocurrency market present potential opportunities for investors. As the regulatory landscape evolves, projects that successfully navigate data protection concerns and comply with stringent standards may gain significant traction. Investors should closely monitor the outcomes of the investigation and the actions taken by Worldcoin and other cryptocurrency ventures in response to regulatory scrutiny.