Youtube Screenshot/ Worldcoin Official YouTube Channel
Following a series of reports revealing that regulators from various countries have launched investigations on Worldcoin and how it collects and stores highly sensitive personal data, Kenya has announced that it is suspending all activities of the iris biometric cryptocurrency project while government agencies in the country evaluate its potential risk to public safety.
Worldcoin, the latest project co-founded by ChatGPT founder Sam Altman, was launched last week in different parts of the world.
The initiative, in some regions, requires users to have their irises scanned in exchange for a digital ID called World ID and a cryptocurrency dubbed WLD, which gives them access to a digital ecosystem as part of the company’s broader plan to create a new financial network.
The company said that these World IDs or the so-called “digital passport” will play a crucial role in a future where the influence of artificial intelligence will be more significant with the Ord, an iris-scanning device, a tool the project uses to determine if the individual is a human or not.
But while several watchdogs in Europe are still looking into the project’s legality of data collection, handling, and storage, Kenya’s Ministry of the Interior has already suspended the operation of Worldcoin on Wednesday.
“The Government is concerned by the ongoing activities of an organization calling itself ‘WORLD COIN’ which is involved in the registration of citizens through the collection of eyeball/iris data,” Minister Kithure Kindiki said in a statement posted on the official Facebook page of the ministry.
“Relevant security, financial services and data protection agencies have commenced inquiries and investigations to establish the authenticity and legality of the aforesaid activities, the safety and protection of the data being harvested, and how the harvesters intend to use the data,” the statement further reads.
“Further, it will be critical that assurances of public safety and the integrity of the financial transactions involving such a large number of citizens be satisfactorily provided upfront,” the minister said before underlining that “the Government has SUSPENDED forthwith, activities of ‘WORLD COIN’ and any other entity that may be similarly engaging the people of Kenya until relevant public agencies certify the absence of any risks to the general public whatsoever.”
The government agency also warned that “appropriate action will be taken on any natural or juristic person who furthers, aids, abets or otherwise engages in or is connected with the activities afore described.”
Aside from its data collection and privacy issues, the crypto community also criticized the project’s cryptocurrency, especially its tokenization, which according to Bitget’s Managing Director, Gracy Chen, is one of the major reasons why the value of its crypto asset nosedived within 24 hours of its launch.
“After much anticipation, Worldcoin has officially launched its WLD token with a short-term price of around $1 on multiple CEXs. Shortly after the announcement, WLD experienced a rapid price surge, reaching a high of $4.7 and representing over 1,000% gains,” the executive said in a note sent to International Business Times.
“However, the current price has dipped to $1.97, a 42% drop from its peak; despite its impressive market cap of $400 million, the token faces challenges in sustaining its valuation due to tokenomics and market conditions,” she added.
The managing director of Bitget, one of the leading derivatives trading platforms, also pointed out Wolrdcoin’s unreasonable market-making terms as one of the waterloo of the project.
“Worldcoin entered into loan agreements with five market-making entities based outside the US, providing them with 100 million WLD each. After three months, these entities must repay the loan or choose to purchase WLD at a fixed price formula,” the executive said.
“With market-makers controlling over 96% of the circulating supply, they hold significant influence over the token’s price. However, the floor price of $2.00 + (0.04 * X) incentivizes them to distribute tokens at prices above $2.80, leading to short-term price pressure,” she explained to IBT.
Moreover, Chen underlined that the change in Worldcoin’s token allocation “redirects more low-cost tokens toward the project team and investors rather than the community.”
Initially, Worldcoin’s allocation to TFH investors and the development team was set at 20%, but the Bitget managing director noted that in the project’s latest whitepaper, it eventually “changed the allocation to 25%, explaining that the development and launch were more complex and costly than initially anticipated.”
“Given the challenges faced by Worldcoin, its valuation may face difficulties unless significant changes occur. Investors considering short-term trades should carefully consider key factors and avoid making impulsive decisions,” Chen noted.
“Worldcoin’s path to sustaining its valuation requires careful consideration of its tokenomics and community involvement: as the market evolves, investors should stay vigilant and evaluate the project’s developments and partnerships. Bitget’s team will continue to monitor and analyze the situation closely to provide valuable insights for the crypto community,” she further said.
As of 12:43 p.m. ET on Wednesday, WLD, the native token of Worldcoin, was trading at $2.46, with a 24-hour trading volume up by 64.47% at $ 159,282,185, representing a 6.97% increase in the last 24 hours and a 6.76% gain over the past seven days.
Based on the latest data from CoinMarketCap, WLD’s total circulating supply stands at 116,443,531 WLD, and its value is up by 7.63% at a $286,755,835 market cap.
