This year packed quite a wallop for Worldcoin. There were regulatory clampdowns, investigations, and even brawls at its eyeball-scanning stations.

And yet Sam Altman’s crypto-powered, online identity venture is growing faster than ever — just not in Europe.

Hemmed in by the European Union’s strict data privacy rules, the venture’s locations for scanning users’ biometric information have rolled out just 16 new kiosks in the past three months, according to company data.

By contrast, the venture’s locations in Latin America have surged more than 70% to over 430 stations. Mexico alone hosts more than 149 Worldcoin kiosks, nearly six times as many as the entire EU.

Worldcoin reboot

The shift from Europe to the developing world underscores Worldcoin’s recent reboot.

In the past few weeks, the venture shortened its name to World and nearly doubled the number of kiosks where people get paid in WLD coins to scan their eyeballs. World has 8 million registered users.

Meanwhile, WLD has jumped 38% since the end of the third quarter as the crypto market staged a broad-based rally.

With operations on hold in Europe, North America, and Africa, Latin America remains one of last available markets for the eye-scanning venture.

‘The early days of Worldcoin iris scanning was absolutely not cute.’

Fatemeh Fannizadeh, Anoma Foundation

World’s problems in Europe stem from its damn-the-torpedos approach to growth.

Though the venture is predicated on scanning people’s irises and collecting unique biometric data, it didn’t seek regulatory approval from health officials or data privacy agencies prior to its global rollout in July 2023.

“The early days of Worldcoin iris scanning was absolutely not cute,” Fatemeh Fannizadeh, general counsel for the Anoma Foundation, told DL News.

“[It was] going to regions where the need for small amount of money was high, where people would more easily part with their sensitive biometric data.”

Blowback

That spurred action in nations ranging from Singapore and Hong Kong to the UK, Spain, and Portugal. In the latter, the data regulator, the CNPD, slapped World for collecting data from minors.

“The report from CNPD is the first time we are hearing from them regarding many of these matters, including reports of underage sign-ups in Portugal,” Jannick Preiwisch, the Worldcoin Foundation’s data protection officer, said in an email to DL News.

Even though crypto culture champions privacy, Worldcoin is under investigation for violating one of the most stringent data privacy regimes on the planet — the EU’s General Data Protection Regulation, or GDPR.

For more than two years in Germany, the Bavarian State Office for Data Protection, or BayLDA, has been investigating whether World infringed on consumers’ rights to data privacy.

World could be prohibited from operating in the 27-nation bloc until it becomes compliant, Michael Will, the agency’s president, told DL News.

Committed to compliance

Being blocked from accessing 448 million potential users would be a serious blow to World’s ambitions of a total of 1 billion users.

A World spokesperson told DL News that the firm complies with GDPR and remains committed to compliance with applicable laws.

World was co-founded by OpenAI’s Altman, Alex Blania, a German entrepreneur, and Max Novendstern in 2019. It has raised a whopping $250 million in investment capital from Andreessen Horowitz and Coinbase Ventures, among other backers.

World has embarked on an audacious business gamble: It aims to provide billions of online users with indisputable proof they are human and not bots or artificial intelligence programmes.

In theory, this distinction will become invaluable as the internet is subsumed by AI programmes that can pose as human beings.

If that all sounds like the plot of a “Black Mirror” episode, the orbs only solidify the idea. Even Altman says the spheres has “a clear ick factor.”

‘It’s often a conscious decision to rapidly expand despite regulatory uncertainty or to operate in a grey area and deal with it later.’

Reuben Yap, Firo

World uses silver and white basketball-sized spheres to scan irises and convert the data into a string of letters and numbers called an iris code.

This code generates a World ID, a digital passport that World hopes will become as ubiquitous as Google’s sign-in feature. Users also get World’s native WLD cryptocurrency.

But the novelty of World’s business model ran into the reality of consumer health and privacy protections. World no longer operates in the UK, Brazil, Hong Kong, and Kenya, among other nations.

“It’s often a conscious decision to rapidly expand despite regulatory uncertainty or to operate in a grey area and deal with it later,” Reuben Yap, co-founder of privacy protocol Firo and former partner at Malaysian law firm Reddi & Co Advocates, told DL News.

“Crypto is not alone in pursuing this, companies like Airbnb and Uber also took similar risks. They wouldn’t have grown to their size if they checked with regulators first.”

Sternest test

It’s in Bavaria, of all places, where the company is facing its sternest test. Even as its probe continues, the BayLDA has directed World to check user IDs to ensure it isn’t scanning minors.

A spokesperson for the BayLDA told DL News in December that it can’t provide any additional updates.

In the last year, World has been roiled by other controversies.

In September, a DL News investigation reported that criminal groups paid cash to homeless individuals, refugees, and drug addicts to have their eyes scanned at kiosks in Berlin and then kick back portions of the crypto they received in exchange.

At least one group may have raked in nearly $700,000 worth of WLD tokens in March and April. A Worldcoin Foundation spokesperson told DL News that it has fraud prevention measures and investigates claims regarding potential fraudulent behaviour.

In September, Singapore’s Deputy Prime Minister Gan Kim Yong warned the public against selling or trading their World IDs for cash.

Yong said seven individuals were investigated for allegedly violating the city-state’s Payment Services Act 2019. A World spokesperson said these individuals are not affiliated with the company.

Despite WLD’s recent runup, the token’s underperformance for the year may be hurting the company’s growth prospects.

At a time when Bitcoin and numerous other cryptocurrencies are hitting all-time highs, WLD is more than 75% lower than its peak in March, according to CoinGecko.

Liam Kelly is a Berlin-based reporter for DL News. Got a tip? Email him at liam@dlnews.com.