Kenyan authorities have accused Worldcoin, a cryptocurrency company, of engaging in espionage activities and posing a threat to the country’s sovereignty. The allegations were made by Kenya’s Ad hoc committee, which has been investigating Worldcoin’s operations in the country.
Worldcoin came under scrutiny for allegedly mining data from Kenyans by scanning their irises in exchange for cryptocurrency tokens. The company operated in 30 locations across Nairobi, including malls and learning institutions, from May 2021.
The committee, led by Narok West MP Gabriel Tongoyo, has called for the Directorate of Criminal Investigations to probe two associated foreign companies, Tools for Humanity (TFH) Corp and Tools for Humanity (TFH) GmbH, for operating illegally in Kenya. The companies are alleged to have violated several Kenyan laws, including the Data Protection Act, Consumer Protection Act, and Computer Misuse and Cybercrimes Act. The investigation revealed that neither company appears in the Business Registration Services database, indicating that they lack the legal mandate to conduct any business in Kenya.
Furthermore, Worldcoin applied for registration as a data controller one year after commencing its activities in Kenya, which is a violation of the Data Protection Act of 2019, according to Kenyan authorities.
The committee’s investigations were prompted by public concerns over Worldcoin’s activities, particularly the transmission of real-time iris images to the company’s servers located overseas. While Worldcoin claims that the data was securely stored in Amazon Web Services based in South Africa, doubts remain about the ability to retract and delete the data when necessary and whether the transfer of personal data outside Kenya complies with the Data Protection Act.
The investigation revealed that approximately 350,000 Kenyans had registered with Worldcoin before the government suspended its activities on August 2, 2023.
This situation highlights the need for comprehensive legislation and oversight in the rapidly evolving digital economy to protect the rights and data of the Kenyan public and ensure companies operate within the confines of the law.
Additionally, Kenya’s National Assembly members have accused Information, Communication, and the Digital Economy Cabinet Secretary, Eliud Owalo, of providing misleading information regarding Worldcoin’s operations in Kenya. Owalo had affirmed that Worldcoin was operating within the parameters of the Data Act 2019 but denied making such statements during the committee’s proceedings. The members censured him for misleading the public.
In response to these developments, there is a push for regulatory reform in Kenya to regulate the cryptocurrency sector. Members of the National Assembly are calling for amendments to the law to grant the Office of the Data Protection Commission more discretion in imposing administrative fines and align the Data Protection Act with global standards. Proposals are also being considered for the creation of a board to oversee the Commissioner’s daily operations and ensure stricter compliance with data protection matters.
The committee’s recommendations include stricter requirements for foreign companies seeking registration as data processors or controllers in Kenya. They would need to provide proof of registration with local regulatory bodies and full disclosure on the utilization and storage of collected personal and sensitive data.
If accepted, the committee’s report could lead to mandatory tax remittance procedures for companies involved in virtual asset transactions under the Income Tax Act. This suggests that there may be stricter regulations on entities dealing in cryptocurrencies and related virtual assets.
Overall, this ongoing saga involving Worldcoin emphasizes the importance of effective regulation and oversight to safeguard the interests of the public and ensure compliance with laws in the digital economy.