Worldcoin, the world currency, is caught in a fraud scandal

The project called Worldcoin outlined a grand vision when it was first created. It planned to issue a digital currency free of charge to 7.9 billion people around the world in order to achieve the ultimate goal of "lifting billions of people out of poverty."

This startup, which was founded in June last year, not only has a luxurious founding team, but also a fantastic funding matrix. Its founder is Sam Altman, former president of top Silicon Valley incubator Y Combinator, and the project is backed by well-known institutions such as a16z and Coinbase Ventures.

Under the halo of the top team, Worldcoin has attracted much attention, but has also been caught up in multiple doubts.

In order to prevent people from repeatedly claiming digital currency or using robots to cheat, Worldcoin uses an extremely sensitive method of collecting biometric information. It uses a silver spherical device called Orb to collect iris information from registered users to ensure that the person receiving the token is a unique human being.

However, without issuing coins, early users only received "vouchers" with theoretical value. As time went by, more and more people accused Worldcoin of fraud. In addition, the violation of user privacy and suspected violation of privacy protection regulations in many countries are also thorny issues facing this project. According to Bloomberg, Worldcoin has stopped its operation plans in at least seven countries.

Star project Worldcoin accused of fraud

In the past few months, on the streets of some countries and regions in Africa, South America, Europe and Asia, people often see promotion teams carrying silver spherical devices, asking passers-by to record their iris information. In return, participants often receive a small gift and a "voucher" of crypto assets worth tens of dollars.

This series of promotion activities was initiated by a company called Worldcoin. In the official introduction, this grandly named project is full of gimmicks. It claims to issue a global digital currency for free to 7.9 billion people around the world "to help economies transition to the crypto economy" and the ultimate goal is to "lift billions of people out of poverty."

The publicity content packaged with grand goals can easily make people associate Worldcoin with a scam, after all, this goal seems too flashy. But counterintuitively, Worldcoin really has a luxurious founding team, and the capital behind it is also star-studded.

Worldcoin was founded in June last year by Sam Altman, former president of top Silicon Valley incubator Y Combinator. At its inception, it received $25 million in financing with a valuation of $1 billion. Investors included top investment institutions and investors such as a16z, Coinbase Ventures, FTX founder Sam Bankman-Fried, and Three Arrows Capital.

This star-studded project has been attracting attention since its launch. Unlike many projects with grand visions but lack of practical actions, Worldcoin began a global blanket promotion shortly after its establishment, distributing digital assets to people. More precisely, before Worldcoin officially issued tokens, it only issued token certificates with theoretical value.

According to Worldcoin's description, in order to prevent people from receiving tokens repeatedly or using robots and codes to cheat, it must ensure that each recipient is a unique human being. Therefore, there is the scene described at the beginning - the person who receives the token certificate must enter the unique iris information offline through a machine.

Orb operators collect iris data in Indonesia

The silver sphere responsible for collecting iris information is called Orb, and its design was created by former Apple and Porsche designer Thomas Meyerhoffer. In Worldcoin's established plan, after collecting eye images, they are hashed to generate a unique identifier, and the open source Semaphore zero-knowledge proof is used to enhance privacy protection.

The method of anti-cheating by collecting irises is very special, but Worldcoin's initial promotion plan has achieved good results. The company first launched a ground promotion in underdeveloped countries and regions around the world and recruited multiple Orb operators. The better performing operators can attract about 1,000 users per Orb device per week. There was even an Orb that registered 2,198 users in one week.

People in poor areas are naturally more receptive to gifts that sound free, which is obviously one of Worldcoin’s strategies. But the good times did not last long. As Worldcoin has not issued tokens for a long time, participants who have “empty checks” that cannot be cashed have begun to get anxious.

"Lies, Worldcoin is no different from other scams." Some users questioned on social media. Similar voices have attracted many people to echo, especially after more than three months without receiving tokens, many people regarded Worldcoin as a fraudulent project.

Scanning irises to issue coins violates privacy

When the overwhelming doubts came, it was not the official Worldcoin team that bore the brunt. Orb operators around the world became the first line of defense.

Since Orb operators have direct contact with users, users were the first to vent their dissatisfaction to them. One user wrote in a text message to the Orb operator, "It's been more than three months now, what have you done to our eyes?" Others called the Orb operator a "thief" and accused it of stealing their eye biometric data.

According to an offline operator, their team received hundreds of angry text messages about Worldcoin, which put them under tremendous psychological pressure.

In fact, most Orb operators do not belong to Worldcoin. They are third-party promotion teams found by the company and are paid according to the number of registered users. According to the operators, in addition to the accusations of users, they also face many problems such as equipment failure, performance pressure, and changes in salary structure.

According to a document obtained by BuzzFeed, if operators have less than 500 registrations for two consecutive weeks, it means they have failed to meet the target and will lose their Orb devices. At the same time, operators in some African countries quit their original jobs after being approved and spent money to print Worldcoin T-shirts as gifts, but it took Worldcoin five months to deliver the Orb to them, and the Orb was defective when it was delivered. In addition, Worldcoin is also constantly adjusting the income of Orb operators, who must complete as many registration targets as possible to maintain their income levels.

Today, many users and Orb operators are dissatisfied with Worldcoin, and some operators have even chosen to go on strike. In addition to these negative emotions, the bigger challenges facing Worldcoin are privacy and regulatory issues.

Collecting human biometric information is inherently very sensitive. Earlier, former CIA employee Edward Snowden, known as the "leak hero," publicly criticized Worldcoin for using human information for encryption. He said, "The human body is not a ticket-stamping machine," and Worldcoin saved the hash generated by the scan and matched it with future scans, "which is bad."

In the face of privacy controversy, Worldcoin has said that it is only to ensure the anti-cheating effect, and once the company's algorithm is optimized, it will delete all iris databases. However, this deletion operation is very difficult to supervise, and the company did not disclose the specific time when the algorithm was optimized, nor did it specify when to stop collecting data.

As this global project has collected hundreds of thousands of eye images in more than 20 countries, Worldcoin has increasingly attracted the attention of regulators in various countries.

Currently, many countries have regulations that prohibit commercial companies from transferring private data abroad, and Worldcoin has obviously touched this red line. Take Kenya as an example. This African country recently passed a data protection law that prohibits companies from transferring biometric data abroad without the approval of the newly established Office of the Data Protection Commissioner. According to the data consent form, Worldcoin currently processes user data in the United States, the United Kingdom, Germany, Japan and India.

Controversy over privacy violations and legal issues have hampered Worldcoin’s development. According to Bloomberg, Worldcoin has halted its operations in at least seven countries after Orb operators left or were banned from doing business by regulations.

Worldcoin, which was named and aimed at being the “world currency”, has fallen into a quagmire. Even with the support of a luxurious VC lineup, the legal issues of the Worldcoin project itself directly threaten its survival amid multiple dilemmas such as fraud suspicion, privacy invasion, and violation of privacy protection regulations. The goal of being the “world currency” seems very unrealistic.