Worldcoin Foundation fined US$4.25 million in Argentina for mishandling biometric data

Buenos Aires Province has imposed a sanction of 194 million pesos on the Worldcoin Foundation for the irregular handling of biometric data obtained by iris scanning across the region.

Argentina’s Buenos Aires Province has slapped a hefty fine of 194 million pesos (US$974,000) on cryptocurrency startup Worldcoin for mishandling biometric data during its iris-scanning campaign in the country.

The provincial government, through its Ministry of Production, Science and Technological Innovation, also ordered the company to remove predatory clauses from its contracts and ensure the protection of consumer rights.

An investigation was launched earlier this year after authorities detected irregularities in the operations of Worldcoin, a company founded in 2019 by Sam Altman, co-creator of ChatGPT. The startup is known for checking people’s identity via iris scanning in exchange for a sum of cryptocurrency, currently valued at US$80.

The program does not set a clear age limit to participate and only requires accepting some terms, including the impossibility of suing Worldcoin. This clause alerted the Buenos Aires Province government, which highlighted the lack of administration and unsafety in the handling of sensitive biometric data collected by the company through its “Orb” device.

Provincial authorities found that the contracts had clauses that violated local regulations and that the handling of biometric data was not carried out as promised. Among the irregularities detected were the lack of a requirement to present an identity document and the minimum age to use the service, which could expose minors to the collection of sensitive data.

"The lack of these requirements could expose minors to the collection of sensitive data, which highlights the urgent need for stricter regulation in a context of growing vulnerability among teenagers," said Ariel Aguilar, Undersecretary of Commercial Development and Investment Promotion of Buenos Aires Province.

Regarding predatory clauses in Worldcoin’s contracts, it was revealed that these documents included provisions that allowed for the suspension of the service without reimbursements, the waiver of class action lawsuits and the application of foreign laws. These conditions violate the Civil and Commercial Code, affecting fundamental rights and posing a significant challenge against local regulation.

"Contradictions in the contract and the lack of clarity on storage of biometric data generate serious doubts. The complexity and novelty of this technology require rigorous supervision to protect consumers," added Aguilar.

Contacted by PERFIL, the Worldcoin Foundation said it was "surprised over the recent fine imposed over the Provincial Consumer Protection Office" and clarified that it "rejects" it.

"The Worldcoin Foundation believes there is a fundamental misunderstanding about the facts and legal framework and will appeal this decision, trusting its position the precedents set by competent courts," they argued.

"The Worldcoin Foundation maintains its commitment to maintain transparent and fair practices, and will continue to uphold the highest standards of data privacy proection in full compiiance with applicable laws and regulations in the markets where Worldcoin operates,” they concluded.

During the first months of 2024, Worldcoin’s call was massive online due to the economic crisis, inflation and the adjustment of middle and lower sectors, to such an extent that ever since there have been over 500,000 Argentine members who had their irises scanned in exchange for cryptocurrency bonds. This setting gained notoriety after there were huge queues at several stalls the company had set up around the Buenos Aires Metropolitan Area.

Given the lack of specific local legislation to regulate this kind of activity and after reviewing international regulations, Buenos Aires Province is developing a data protection law that seeks to safeguard the rights of citizens in the face of new technologies.

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