Worldcoin Legal Troubles: Buenos Aires Proposes $1.2M Fine

Key Takeaways

• Legal Troubles in Buenos Aires: Worldcoin, led by Sam Altman, faces legal challenges in Buenos Aires for alleged violations of consumer rights, resulting in a proposed $1.2M fine.
• Data Handling Concerns: The Ministry of Production in Buenos Aires has raised concerns about Worldcoin’s data handling practices, particularly regarding biometric data storage and deletion, highlighting potential user rights infringements.
• Violation of Consumer Protection Laws: Inspections revealed potential violations of national consumer protection laws by Worldcoin, including inadequate age-related user notifications and clauses that could waive users’ rights.
• Legal Jurisdiction Issues: Worldcoin’s contracts suggest resolving disputes under foreign laws, conflicting with Argentina’s legal framework, potentially leading to further legal complications.
• Potential Fine: If proven, Worldcoin could face a substantial fine, signaling the seriousness of the allegations and legal ramifications.
• Regulatory Challenges in Spain: Beyond Buenos Aires, Worldcoin also faces regulatory hurdles in Spain, with a temporary ban imposed due to privacy and data protection concerns.
• Global User Growth vs. Compliance: Despite regulatory setbacks, Worldcoin’s user base continues to grow globally, highlighting the project’s challenges in balancing expansion with regulatory compliance.

Here’s a breakdown of the key issues and concerns raised by Buenos Aires authorities:

Data Handling Practices

The Ministry has flagged discrepancies in Worldcoin’s reported data handling practices compared to their actual practices found during inspections.

Undersecretary Ariel Aguilar has expressed concerns about the storage and deletion of biometric data. He highlighted the lack of transparency and potential infringement on user rights.

Aguilar stated that the complexity of Worldcoin’s agreements, combined with limited information, makes it challenging to fully understand the system.

Violation of Consumer Protection Laws

Inspections revealed that Worldcoin may not adequately inform users that only adults over 18 can use their service. Ultimately, this could lead to the collection of minors’ data.

Biometric data collected from Argentine users is allegedly stored in Brazil, raising privacy and data sovereignty questions.

Contracts, including terms of use, privacy notices, and data consent forms, contain clauses that could violate national consumer protection laws.

These clauses include provisions allowing Worldcoin to suspend services without compensation and waiving users’ rights to collective legal action.

Legal Jurisdiction and Disputes

The terms of Worldcoin’s contracts suggest resolving disputes under foreign laws. These laws include those of the Cayman Islands. Additionally, disputes are to be resolved through arbitration in California, USA. This contradicts Argentina’s legal framework.

Potential Fine

If proven, Worldcoin could face a fine of up to 1 billion Argentine pesos ($1.2 million), with Buenos Aires authorities holding the company solely liable for the penalty.

Moving beyond Buenos Aires, Worldcoin has also encountered regulatory challenges in Spain.

Ban in Spain

Spain has applied a temporary ban on Worldcoin due to privacy and data protection concerns.

The Spanish data protection authority, AEPD, has demanded Worldcoin’s data collection activities come to a stop. It cites high risks to individuals’ rights, especially regarding biometric data processing.

The ban comes in response to numerous complaints about Worldcoin’s handling of user information, particularly related to minors and consent revocation issues.

Despite these regulatory setbacks, Worldcoin’s World App has seen significant user growth globally, with 10 million users and 2 million daily active users. However, the project faces ongoing challenges balancing rapid expansion with regulatory compliance to retain its global user base.