Worldcoin’s eyeball-scanning stations were gamed by hustlers who exploited the homeless

In March, something strange happened at one of Worldcoin’s eyeball-scanning stations in Berlin — a 10-person brawl erupted.

Chechen nationals, refugees, and security guards traded punches, leaving one guard with a bloody nose.

This was just one of several fights at Worldcoin sites in the German capital this spring as volunteers queued up to get their irises scanned in exchange for free crypto, according to three people with direct knowledge of the incidents.

“There were fights on occasion and the police were called,” said Daniel, an employee at a high-end clothing store near one of the Worldcoin stations.

Many willing sign-ups at Worldcoin sites were not crypto enthusiasts — they were homeless people, refugees, and drug addicts paid by suspicious groups to get scanned and then fork over their crypto rewards, said the people.

Clear incentive

The incentive was clear — at the time, every Worldcoin volunteer received roughly $100 worth of its cryptocurrency, WLD.

At least one group in Berlin enlisting these recruits may have raked in nearly $700,000 worth of tokens in March and April, when the token was peaking, according to a DL News analysis.

Worldcoin representatives did not comment directly on the fights at its sites in Berlin.

A Worldcoin Foundation spokesperson told DL News that it “has a number of fraud prevention measures in place, conducts investigations into claims regarding potential fraudulent behaviour, and takes corrective action as appropriate.”

‘A few times I got physically threatened and yelled at in my face.’

—  Witness

Worldcoin, a crypto startup co-founded by OpenAI CEO Sam Altman, has been plagued by controversy since it started scanning people’s eyes as part of an online identification project.

In the spring, Worldcoin tried to thwart what it called “undesirable” sign-ups who didn’t know what the company did or about cryptocurrencies, according to a person familiar with the policy.

Worldcoin supervisors instructed staff to quiz sign-ups on why they were getting their eyeballs scanned, and if they didn’t provide a satisfactory answer, they were to be rejected.

Physically threatened

In March, a large group began regularly hanging around the orb scanning station at Hackesche Höfe, a wealthy shopping arcade in central Berlin.

As it happened, Worldcoin’s token WLD had quintupled in value in the last month amid buzz about the project.

The staff at Worldcoin’s site got to know the group, who said they were from Chechnya, a war-torn part of Russia. They were aggressive.

“A few times I got physically threatened and yelled at in my face,” said one person who dealt with them.

Tensions mounted as Worldcoin staff started screening sign-ups. They suspected the Chechens were wrangling refugees to sign up for a scan and the crypto reward, according to DL News’ sources.

When they rejected three refugees from getting scanned, the Chechens refused to leave, and suddenly, blows were exchanged. One antagonist threw a café chalkboard menu through the air as yelling filled the mall’s courtyards.

Constant stress

The stress was constant in the mall during Worldcoin’s tenure there, employees at other retailers told DL News.

“I called the building manager at one point because it was too much,” said Kristin, an employee of a jewellery store in the arcade, who asked to use only her given name to protect her privacy.

The fiasco in Germany comes to light just as Worldcoin is coping with a slew of regulatory crises worldwide.

With almost seven million users in more than 160 nations, Worldcoin says its eyeball-scanning technology complies with relevant laws and regulations.

Yet the company has been scrutinised for allegedly violating privacy protections and scanning the eyes of minors without parental consent.

In January, Hong Kong’s data privacy watchdog raided six Worldcoin operators in the city and warned the public not to have their eyes scanned.

In March, Spain banned the company after citing the extremely sensitive nature of capturing people’s biometric data and complaints that the company was scanning minors.

Portugal’s data regulator prohibited Worldcoin the same month after it, too, received complaints the firm was allegedly collecting minors’ biometric data without parental authorisation.

Meanwhile, a regional German regulator is preparing to release the results of a two-year probe into whether the company is complying with the European Union’s strict data protection law, GDPR. The review is examining how Worldcoin treats and stores the biometric data gathered from users.

GDPR issues

If the agency finds Worldcoin violated GDPR, it will not be able to operate in Europe until it becomes compliant, Michael Will, the president of the Bavarian Office for Data Protection Supervision, told DL News.

As for the groups paying people to be scanned, Will said he learned about the activity but that it was beyond the scope of the agency’s investigation.

Unusual business model

The drama enveloping Worldcoin stems from its unusual business model.

Founded in 2019 as a play on the rise of AI, Worldcoin aims to distinguish human beings from machine-generated online users.

Its basketball-sized sphere scans the iris and converts the biometric data into a string of letters and numbers called an iris code.

The code — instead of a phone number, email address, or passport — becomes the basis of your WorldID, which is managed on the company’s app.

Tools for Humanity, the company developing Worldcoin, hopes that WorldID will become as ubiquitous as Google’s sign-in feature.

The pitch has already earned millions in investment from Silicon Valley’s elite venture capitalists, including Andreessen Horowitz. Worldcoin is worth $3 billion, according to its last valuation in March 2022.

Along with a WorldID, Worldcoin attracts users with WLD. Each sign-up in Spring earned 10 WLD tokens on the spot and another 3 WLD tokens within the first 24 hours.

At the token’s peak in March, one new Worldcoin user earned nearly $150 for 15 minutes of their time.

Word spread about the easy money. Just one Worldcoin location in Berlin signed up an average of 200 people every day in the spring, according to a person with knowledge of the matter.

It wasn’t long before hustlers targeted vulnerabilities.

‘We could see them in the malls, passing phones from hand to hand, and going up to random people.’

—  Witness

They gave recruits a cheap smartphone and told them to get their eye scanned at one of Worldcoin’s orbs. They told the recruits they would pay up to €50 to get scanned.

Once they were scanned and obtained a WorldID, the users returned the phones to the hustlers who collected Worldcoin’s native cryptocurrency, WLD.

Ukrainian nationals often brought individuals from their community to sign up using Worldcoin’s referral codes, which are invitations existing customers can use to recruit new users and pocket additional WLD. That soon changed.

“It started to become quite obvious that it wasn’t people they knew anymore, and we could see them in the malls, passing phones from hand to hand, and going up to random people,” one person said.

Homeless individuals and people with substance abuse issues were paid to have their eyes scanned.

In March and April, roughly half of the questionable scans in Berlin were made on behalf of the Chechen group, according to an estimate provided by a person with knowledge of the matter.

Using that estimate, the Chechens may have raked in 95,000 WLD.

Using the average token price over the 61 days in March and April, the Chechens were in a position to earn around $685,000.

Few customers

Worldcoin is piloting a new security measure in certain locations. The orb now photographs the faces of sign-ups and stores them on Worldcoin app users’ mobiles. Users will soon have to access the app with facial recognition.

Still, WLD has plummeted more than 85% since its March high, according to data from CoinGecko. Bitcoin, by comparison, has slid 13% in that time frame.

And the queues for its orbs are gone.

“We sat in there all day,” said one person, “and sometimes we had two people come in the whole day.”

Liam Kelly is a DeFi Correspondent for DL News. Got a tip? Email him at liam@dlnews.com.