A Kenyan parliamentary committee formed in August to investigate operations and activities of Sam Altman’s crypto project, Worldcoin, in the East African country, has recommended for it to be shut down.
The committee, in a report published today and seen by TechCrunch, called on Kenya’s ICT regulator, the Communication Authority, to disable Worldcoin’s physical and virtual presence “including blacklisting the IP addresses of related websites” until the country establishes proper regulations over virtual assets.
The recommendations by the team of lawmakers come after Kenya suspended Worldcoin enrollment in the country in early August over concerns related to the “authenticity and legality” of its activities in the areas of security, financial services and data protection.
The committee has recommended that the country develops “a comprehensive oversight framework and policies on virtual assets and virtual assets service providers in Kenya, within six months of the adoption of this report and submit the same to the National Assembly to take appropriate legislative measures.”
It also called on the cabinet secretary for the National Treasury “in consultation with the relevant stakeholders to develop regulations and enforcement infrastructure to ensure that virtual assets and virtual asset providers and their activities are adequately regulated and monitored.” The report is set to be tabled before the National Assembly for consideration and implementation.
The report also called for criminal investigations into the operations of Tools for Humanity Corp., the company building Worldcoin, Tools for Humanity GmbH, Germany (Worldcoin), and its Kenyan partners, including Sense Marketing, and for “necessary legal action” to be taken. The partners are said to have aided and abetted criminal activities. There is an ongoing multi-agency investigation on Worldcoin operations and activities in Kenya around security, privacy and the legality of using “financial incentive” to obtain biometric data.
Call for an investigation come after the committee established that Tools for Humanity and its subsidiary had violated Kenyan regulations including the data protection law, consumer protection act, and computer misuse and cybercrimes act, and that its activities “constituted acts of espionage and a threat to statehood.”
It also established that Worldcoin, Tools for Humanity Corp (USA) and Tools for Humanity GmbH (Germany) were not registered businesses in Kenya. Additionally, it found out that Sense Marketing and other local partners were not registered as data processors or controllers despite collecting data on behalf of the crypto project. Worldcoin also failed to get approval from ICT regulator to use the Orbs, which it said are telecommunication devices, in the country.
Worldcoin has also triggered a review of the current legal framework in Kenya. The report recommended for the country to provide a requirement for full disclosure on how companies (data controllers and processors) will utilize and store personal and sensitive data collected in Kenya. It called for the provision of “legislative interventions to govern the collection of biodata from Kenyans, which has implications on privacy, security, health concerns and human rights” while also recommending for the formation of a board “where the Office of the Data Protection Commissioner reports or accounts on its daily operations.”
Worldcoin is said to be creating a new “human identity (global ID) and financial network” through eye scans and its own cryptocurrency. Kenya was one of the first countries where it launched signups, and one of the biggest markets for take-up especially after the official launch late July. However, an influx of people at recruitment (Orb) stations for the signup bonus (“free” crypto tokens) drew the attention of government agencies leading to the suspension of Worldcoin iris scans in Kenya, which ranks second in Africa (19th globally) after Nigeria in terms of crypto adoption. It also ranks fifth globally with regard to peer to peer (P2P) exchange trade volume, according to 2022 Chainalysis report.
The report thwarts Tools for Humanity’s plan to resume operations in Kenya soon, and follows increasing global scrutiny on the company. Worldcoin is already on the radar of regulators in Europe.
Updated at 9:21 PM (PDT) October 2, 2023