The Bavarian State Office for Data Protection Supervision has initiated an investigation into the Worldcoin crypto project, a new initiative that requires users to provide iris scans in exchange for a digital ID and potentially free cryptocurrency, according to Reuters. The investigation, which began in November 2022, is probing the large-scale processing of sensitive biometric data.

Worldcoin, launched last week with the ambition to create a new “identity and financial network,” has already seen 2.1 million sign-ups, primarily during a two-year trial period. The sign-up process involves a shiny spherical “orb” that scans faces in various locations, including France, Germany, and Spain.

The German regulator’s president, Michael Will, has expressed concerns about the project’s use of new technology to process sensitive data on a vast scale. Questions have been raised about the suitability of these technologies for transferring financial information, and whether users have provided explicit consent based on clear and sufficient information.

Worldcoin’s network is described as “privacy-preserving” on its website, with assurances that personal data is stored in encrypted form. The Worldcoin Foundation, a Cayman Islands-based entity, has publicly stated its compliance with European Union rules and pledged cooperation with governing bodies regarding privacy and data protection practices.

However, privacy campaigners have voiced concerns over the wide-scale collection and storage of biometric data, fearing potential increases in surveillance or targeted actions against specific demographic groups.

Several European supervisory authorities have also shown interest in Worldcoin. France’s privacy watchdog has commented that the legality of Worldcoin’s data collection appears “questionable,” and Britain’s data regulator has announced plans to make inquiries into the project.

The investigation is led by the Bavarian state regulator due to the presence of a German subsidiary of Tools For Humanity, the company behind Worldcoin, in the region.

The Worldcoin project represents a novel approach to identity verification and financial networking but has clearly raised significant legal and ethical questions. As the investigation continues and more authorities express interest, the crypto community and privacy advocates alike will be watching closely to see how these concerns are addressed.

But the scrutiny in Germany is not the only challenge Worldcoin faces.

Worldcoin underwent comprehensive security audits conducted by Nethermind and Least Authority, beginning in April 2023. The audits covered areas such as correctness of implementation, secure key storage, resistance to attacks, and data privacy. Out of 26 items identified, 24 were fixed, one was mitigated, and one was acknowledged.

Despite these measures to enhance security and privacy, the project’s coin WLD launch on July 25, 2023, was met with immediate criticism. French and UK authorities questioned the legality of Worldcoin and considered investigating potential violations of data protection laws, adding to the growing list of concerns surrounding this ambitious project.

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