Worldcoin under fresh scrutiny? China warns against crypto-for-iris trend

China’s national security agency is calling out the growing trend of projects collecting sensitive biometric data like iris scans in exchange for digital assets.

In a public advisory issued through its official WeChat account on August 6, China’s Ministry of State Security (MSS) warned that facial, fingerprint, and iris data are increasingly being harvested under false pretenses, with some using crypto incentives as bait. 

According to the MSS, such practices pose serious risks and threats to both personal privacy and national security. The alert points to past examples where foreign actors collected iris and facial data under the guise of identity verification or token distribution, then transferred that data for unknown purposes.

The agency emphasized that this kind of data, when mishandled, could be used to impersonate individuals, infiltrate secure facilities, or support surveillance and espionage operations.

While the agency did not mention a specific entity, the description closely matches Worldcoin, the controversial project that has often faced scrutiny for a similar model.

What is Worldcoin, and why is it controversial?

Worldcoin, recently rebranded to World, was launched in July 2023 by Tools for Humanity, a tech company co-founded by OpenAI CEO Sam Altman. The project aims to build a global digital identity system called “World ID,” which requires users to verify their identity by scanning their iris using a silver sphere device called the Orb.

In return, users receive the native token tied to the project, WLD (WLD). Worldcoin says its system helps distinguish humans from AI online and expands financial access, while offering a secure and anonymous way to verify identity.

While World promotes itself as privacy-first, it has faced pushback in several regions over how it collects and stores biometric data.

Worldcoin and data privacy concerns 

Since its official rollout, World has sparked global controversy due to the nature of its operations. The Kenyan government was the first to ban the project in September 2023, just months after rollout, citing concerns over how it was collecting and using citizen data.

Not long after, the Office of the Privacy Commissioner for Personal Data in Hong Kong ruled that Worldcoin violated the city’s personal data ordinance, posing risks to privacy. Other regions like France, Portugal, Spain, Brazil, and South Korea also raised similar concerns, and the project has been forced to exit some of these markets under regulatory pressure.

Worldcoin defends its operations by claiming biometric data is protected through privacy-preserving technologies like zero-knowledge proofs. In October 2024, the platform underwent a rebrand and launched a new layer-2 network, which it says prioritizes compliance with data protection laws.

Still, questions remain over its biometric data collection and the potential for misuse or unauthorized distribution.

Meanwhile, the WLD token has been in decline. Trading at $0.94 at press time, WLD is down nearly 45% over the past year and 90% from its highest point. The tumble in price has been largely fueled by negative regulatory pressure, and should troubles now emerge from China, the token could face further downside.