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“Stay Away from Unregulated Entities & Products” – CMA Issues Public Warning on Worldcoin.

The Capital Markets Authority has warned Kenyans against the ongoing worldcoin registration in the country. CMA advised the public to be wary of potential fraudulent schemes that may emerge in the over-the-counter market of crypto tokens.

In a statement issued on Wednesday, the authority said worldcoin is not regulated in Kenya therefore cautioning the public against dealing with unregulated entities and products.

CMA also added that its related products, including crypto-tokens or their derivatives, are not investment products and do not fall under the scope of the Capital Markets Act, hence not under CMA’s regulations.

Worldcoin is an iris biometric cryptocurrency project developed by San Francisco and Berlin-based Tools for Humanity. Founded in 2019 by OpenAI chief executive Sam Altman, Max Novendstern, and Alex Blania, it is backed by VC Andreessen Horowitz.

In October 2021, the project raised an initial $25 million. Within six months, an additional $100 million was raised pushing the token’s value up to $3 billion.

Further funding of $115 million was announced in May 2023, to be used for investment into bot detection, research and development, and expanding the Worldcoin project and application. While in beta, Worldcoin was reported to have onboarded approximately two million users.

Kenya is the first country to fully suspend Worldcoin operations.

On Tuesday, long queues were seen leading to the Kenyatta International Conference Center where eye-scanning was taking place, prompting the police to stop the registration citing security concerns.

“The public is further advised to be wary of potential fraudulent schemes that may emerge in the over-the-counter market of crypto tokens,” CMA said in a statement.

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“CMA is cognizant of the importance of Fintech and the benefits that can be derived from leveraging block chain technology,” it added.

“The Authority is willing to work with interested parties through the already established Regulatory Sandbox model for the purpose of supporting innovative Fintech products in a controlled and safe environment for the investing public.”

“The CMA cautions the public against dealing in unregulated entities and products,” CMA concluded.

This comes only a few days after the Office of the Data Protection Commissioner (ODPC) also cautioned members of the public against using Worldcoin over safety concerns.

The ODPC says that the digital identification firm is processing sensitive personal data and thus needs to be compliant with the Data Protection Act, 2019.

At the same time, the government suspended all activities of the cryptocurrency project WorldCoin pending the conclusion of inquiries aimed at establishing the safety of the data being harvested.

Interior Cabinet Secretary Kithure Kindiki, in a statement Wednesday, said the move will remain in effect until assurances of the safety and integrity of financial deals are provided.

“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,” said the statement signed by Minister Kithure Kindiki.

“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,” reads the statement.

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“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.”

Kenya is the first country to take a big step by completely suspending the company’s operations while local agencies investigate. Some European regulators are also looking into Worldcoin and its activities.

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