Worldcoin Faces Legal Probe in Argentina Over Biometric Data Concerns

Worldcoin, an open-source protocol collecting users' biometric data, faces legal challenges in Buenos Aires, Argentina. The Provincial Directorate for the Defense of Consumer Rights identified abusive clauses in Worldcoin's user contracts, leading to concerns about data handling and potential infringements on user rights. Inspections revealed discrepancies between Worldcoin's reported data practices and findings, including the storage of biometric data in Brazil and the potential violation of Argentina's Civil and Commercial Code.

Worldcoin Faces Legal Scrutiny in Buenos Aires Amidst Concerns over Biometric Data Handling

The rapidly expanding open-source protocol Worldcoin, founded by renowned entrepreneur Sam Altman, has encountered a series of legal challenges in recent months, including a recent indictment issued by authorities in the province of Buenos Aires, Argentina. This indictment stems from an investigation by the Provincial Directorate for the Defense of Consumer Rights, which uncovered several alleged violations in Worldcoin's user contracts, prompting concerns over the handling of sensitive biometric data.

Discrepancies in Worldcoin's Data Practices

The authorities in Buenos Aires have raised concerns that the practices reported by Worldcoin regarding its handling of biometric data contradict the findings of provincial inspections. The investigation revealed "abusive clauses" in the company's accession contracts, which are said to violate Argentina's National Consumer Protection Law.

The Undersecretary for Commercial Development and Promotion of Investments in the province, Ariel Aguilar, expressed concerns about the lack of transparency surrounding Worldcoin's data processing procedures. He questioned whether biometric data was being stored or promptly deleted, the existence of databases containing personal data of Argentine users in Brazil, and the complexity of the system's contracts and operations.

Abusive Clauses and Violations in User Contracts

The provincial inspections identified multiple violations in Worldcoin's adhesion contracts, including the "Terms and Conditions of Use," "Privacy Notice," and "Data Consent Form." One notable violation was the company's failure to clearly display signs indicating the minimum age requirement of 18 for accessing the service, potentially leading to the collection of personal data from minors.

In addition to the lack of transparency, the contracts were found to contain abusive clauses. These clauses included provisions that allowed the company to suspend the service without offering repairs or refunds, forced users to waive collective redress claims, and subjected them to foreign laws, specifically those of the Cayman Islands, with disputes to be resolved through arbitration in California, United States. These provisions violate Argentina's Civil and Commercial Code.

Contradictions in Biometric Data Handling

Further contradictions were discovered regarding Worldcoin's reported use, protection, and storage of biometric data collected from the faces and eyes of Argentine users. Despite assurances that this sensitive information would be stored securely, it was discovered that the data was being stored in Brazil.

Potential Fines and Ongoing Operations

Worldcoin now faces potential fines of up to 1 billion pesos (approximately $1.2 million) as a result of these alleged violations and discrepancies. The company had been operating in various cities in Buenos Aires, collecting biometric data using its Orb technology device in exchange for providing users with the World App financial application and cryptocurrency rewards in the form of Worldcoin's native token, WLD.

Unexpected Token Surge Amidst Legal Scrutiny

Despite the increasing legal scrutiny, WLD has experienced a surge of 2.6% in the past 24 hours, currently trading at $4.80. However, this surge should be viewed with caution, as it has not significantly altered the token's overall performance. Over the past day, WLD's trading volume has declined by 7.10%, and since its all-time high of $11.74 on March 10, it has witnessed a significant drop of over 58%.

The market correction has also impacted WLD's market capitalization, which has fallen below the billion-dollar level and currently stands at approximately $920 million.

Conclusion

The legal challenges and concerns over data handling practices facing Worldcoin serve as a reminder of the importance of transparency, adherence to consumer protection laws, and ethical considerations in the collection and use of biometric data. As technology advances and data becomes increasingly valuable, it is imperative for companies to prioritize privacy, transparency, and compliance to gain the trust of users and ensure the responsible development of innovative technologies.