Why is OpenAI founder's Web3 project Worldcoin banned from operating?

Author: Liu Honglin, Mankun Blockchain

Recently, the Office of the Privacy Commissioner for Personal Data (PCPD) in Hong Kong has completed its investigation into the Worldcoin project, determining that its operations in Hong Kong violate the Personal Data (Privacy) Ordinance (PDPO).

On May 22, Privacy Commissioner Ada Chung issued a compliance notice to Worldcoin, ordering it to immediately cease all projects in Hong Kong involving the use of iris scanning devices to scan and collect the public's iris and facial images.

The PCPD began its investigation into the Worldcoin project in January 2024 to determine whether this authentication method poses a serious risk to citizens' personal data privacy and violates the requirements of the Personal Data Protection Ordinance.

From December 2023 to January 2024, the PCPD conducted 10 covert visits to six locations involved in the operation of the Worldcoin project. According to the PCPD, during its operations in Hong Kong, Worldcoin scanned the faces and irises of 8,302 individuals for verification, while the collection of facial images was unnecessary for verifying participants' authenticity, as the iris scanning device operators were already able to conduct such verification in person at the operational sites, making the scanning or collection of facial images an unnecessary step. Meanwhile, Worldcoin's privacy statement did not have a Chinese version, meaning non-English participants could not understand the project's policies, practices, terms, and conditions. In the PCPD's view, Worldcoin failed to provide sufficient information, hindering individuals from making informed decisions and giving genuine consent.

For the reasons stated above, the PCPD believes that Worldcoin's collection of facial and iris images is unfair and illegal, violating its data protection principles. The PCPD ruled that Worldcoin's retention of sensitive biometric data, including facial and iris images, for up to 10 years solely for training artificial intelligence models is unreasonable.

Introduction to Worldcoin

Worldcoin's mainnet and its cryptocurrency, Worldcoin, officially launched on July 24, 2023, in over 20 countries. After its launch, its price fluctuated several times. As of May 17, 2024, the price of Worldcoin has reached $4.863.

As of May 17, 2024, data published on the Worldcoin official website shows that Worldcoin has been online for 298 days, with World ID certified users covering over 160 countries/regions. The Worldcoin website claims that Worldcoin aims to become the world's largest real identity and financial network, protecting privacy and being owned by all. Worldcoin seeks to provide a channel for everyone to participate in the global economy, regardless of country/region or background, establishing a place of benefit for all in the AI era.

The co-founder of Worldcoin is Sam Altman. In addition to being a co-founder of Worldcoin, Sam Altman served as the president of the startup accelerator Y Combinator from 2014 to 2019 and as the CEO of the artificial intelligence company OpenAI from 2019 to 2023. He is known for his belief in artificial general intelligence (AGI). He believes that AGI will be able to accomplish anything that humans can do.

OpenAI launched the first version of the ChatGPT model in June 2020 and has since released several updated versions. The ChatGPT website claims, "Our mission is to ensure that artificial general intelligence benefits all of humanity."

Similarly, the Worldcoin white paper also states that its founding purpose is to create a globally inclusive identity and financial network owned by the majority of humanity. If successful, it could significantly increase economic opportunities, provide a reliable solution to distinguish humans from AI on the internet, while protecting privacy, promoting global democratic processes, and demonstrating a potential path for universal basic income (UBI) powered by AI.

Three Key Elements of Worldcoin

Worldcoin consists of three main elements: World ID, Worldcoin tokens, and World App.

(1) World ID

World ID is a privacy-focused identity verification method that allows users to verify their humanity online while maintaining personal privacy through a device called Orb. This verification is based on zero-knowledge proof technology, ensuring that identity verification is completed without disclosing detailed user information. World ID is personal and exclusive to its holder, and even in the event of loss or theft, users can recover their World ID.

(2) Worldcoin Tokens

To encourage user growth, Worldcoin will distribute tokens to all network participants. This could lead to Worldcoin becoming the most widely distributed digital asset.

(3) World App

World App is the first application of World ID. It guides users through the identity verification process via Orb, manages users' World ID credentials, and shares these credentials with third parties while protecting privacy. The app also provides seamless access to global decentralized financial services.

Worldcoin is based on World ID, aiming to conduct airdrops fairly, protect social media from bot/sorcery attacks, and achieve equitable distribution of limited resources. To participate in the Worldcoin protocol, one must first download the World App and authenticate their identity through Orb to obtain a World ID.

Features of Worldcoin - Biometric Verification

A significant feature of Worldcoin is its biometric verification of each unique individual. The philosophy of Worldcoin is that rapidly advancing artificial intelligence can produce many contents that are trusted to be "human." Therefore, inclusivity and privacy protection are extremely important in the operation of public infrastructure. If every piece of information or transaction is guaranteed to contain "verified human attributes," it can filter out much noise from the digital world. Currently, collective decision-making in Web3 largely relies on token governance, which leads to some individuals being excluded from governance systems while giving those with more economic rights an advantage. Therefore, it is becoming increasingly important to include every individual in the governance system, which will be the foundation for maximizing the benefits of artificial intelligence for all humanity.

Verifying each real person through biometric verification also relates to the distribution of social resources. With the advancement of artificial intelligence, fairly distributing usage rights and some created value through UBI will play an increasingly important role in offsetting the concentration of economic power. Decentralized personality proof protocols can assist any global project or organization in achieving fair resource distribution. Obtaining a World ID through biometric verification ensures that each person is verified only once, preventing multiple registrations and ensuring fair distribution. Additionally, biometric verification can effectively ensure the security of World ID, guaranteeing that only the individual holding the ID can use it, and allowing for recovery in the event of loss or damage.

Worldcoin uses iris biometric technology to verify personal information. Tools for Humanity, the advisory body of the Worldcoin Foundation and the operator of World App, has released Orb to complete the aforementioned verification.

Reasons for Worldcoin's Restrictions

The "WORLDCOIN Foundation Terms and Conditions" state: "To use the services… you must meet all of the following conditions: You are not located in, subject to, or a national or resident of the following countries or regions: Syria, Crimea, Donetsk, Luhansk, Kherson and Zaporizhia in Ukraine, Russia, North Korea, Iran, Cuba, or any other country or region that restricts access to services by the United States, the European Union, or any other country or jurisdiction… If you do not meet all of these requirements, you may not access or use the services."

(1) Impact of Cryptocurrency Policies

Countries have vastly different policies, laws, and regulations applicable to cryptocurrencies, resulting in a constantly changing market environment for cryptocurrencies operating in different countries. As a cryptocurrency, Worldcoin tokens are no exception. Different countries have varying attitudes toward cryptocurrencies, leading to restrictions on the purchase and use of Worldcoin tokens in some countries. Some countries impose restrictions on cryptocurrencies to prevent financial risks and illegal activities.

China. On December 3, 2013, Chinese regulators issued a notice titled "Notice on Preventing Bitcoin Risks" (Yin Fa [2013] No. 289). The notice stated, "To protect the property rights and interests of the public, safeguard the legal status of the Renminbi, prevent money laundering risks, and maintain financial stability," "Bitcoin should be regarded as a specific virtual commodity, not having the same legal status as currency, and cannot and should not circulate as currency in the market." From 2013 to 2014, China classified Bitcoin as a "virtual commodity," allowing the public to hold it at their own risk while prohibiting banks and payment institutions from providing services for Bitcoin transactions. Between 2017 and 2019, Chinese regulators introduced a series of regulatory policies regarding cryptocurrencies, declaring ICOs illegal, banning trading platforms from operating within China, and prohibiting the mining industry. On September 15, 2021, Chinese regulators issued a notice titled "Notice on Further Preventing and Handling Risks of Virtual Currency Trading Speculation" (Yin Fa [2021] No. 237), stating, "Recently, virtual currency trading speculation activities have surged, disrupting economic and financial order, breeding gambling, illegal fundraising, fraud, pyramid schemes, money laundering, and other illegal activities, seriously endangering the property safety of the people. To further prevent and handle risks of virtual currency trading speculation, and effectively maintain national security and social stability," and stipulated that virtual currency-related business activities are illegal financial activities, and those engaging in such activities may be held criminally liable.

South Korea. In September 2017, the South Korean Financial Services Commission (FSC) announced a decision to ban ICOs and credit trading of virtual currencies. According to a report by South Korea's News1 Kim, FSC Vice Chairman Kim Yong-bum stated, "The financial authorities are banning ICOs. The aim is to prevent a surge in speculative receivables demand due to ICO fraud, which could harm the market." On July 18, 2023, the FSC issued the "Act on the Protection of Virtual Asset Users." This law aims to protect the rights and interests of virtual asset users by regulating matters related to the protection of user assets and unfair trading behaviors, and to promote the establishment of transparent and sound trading practices in the virtual asset market. The law specifies virtual assets in terms of user asset protection, regulation of unfair trading, supervision, and handling.

(2) Application of Biometric Technology

Worldcoin's use of iris biometric technology to verify personal information is also a reason for its restrictions in some countries.

Kenya. Kenya was one of the first countries to launch Worldcoin registration and certification. However, the Kenyan government later issued a ban, suspending Worldcoin's registration and certification in the country. The Kenyan Ministry of Interior announced in a statement, "Immediately suspend Worldcoin activities until relevant government agencies prove that there is no public risk." The government expressed concern over Worldcoin's activities of registering citizens by collecting eye/iris data and stated that an investigation had been launched "to determine the authenticity and legality of the activities, the safety and protection of the collected data, and how the collectors intend to use this data."

France. France has expressed skepticism about Worldcoin's collection of users' iris information. The French data protection regulator, the National Commission on Informatics and Liberty (CNIL), has previously questioned Worldcoin's methods of collecting biometric data, particularly regarding their legality and storage conditions. Therefore, CNIL launched an investigation into Worldcoin's data collection and processing activities to ensure compliance with French and European data protection regulations. This investigation was also assisted by the Bavarian authorities in Germany.

Germany. The Bavarian State Office for Data Protection Supervision has also conducted an investigation into Worldcoin's handling of sensitive biometric information, which began in November 2022. The office expressed concerns about Worldcoin's large-scale processing of biometric information, stating that these technologies "are neither mature nor adequately analyzed for specific core purposes related to financial information."

Spain. The Spanish Data Protection Agency (AEPD) has ordered Worldcoin to cease data collection and processing in Spain and issued a temporary ban for three months. AEPD's order stated that the agency is investigating complaints regarding Spanish users' inability to withdraw consent and allegations that Worldcoin collected data from minors. "AEPD requires the cessation of the collection and processing of special categories of personal data and the blocking of already collected data. AEPD has received several complaints, including insufficient information, collection of data from minors, or failure to allow withdrawal of consent."

Conclusion

The Worldcoin project carries the noble vision of its founders, with the white paper proudly stating that Worldcoin will respect user privacy and include everyone in the global economy, regardless of country, region, or background, creating a globally inclusive identity and financial network owned by the majority of humanity. It aims to significantly increase economic opportunities and promote global democratic processes. However, in reality, Worldcoin's operations are influenced by the cryptocurrency policies of various countries. In addition, Worldcoin's collection of biometric data has also led to investigations and restrictions.