Worldcoin hit with $850K fine in South Korea

Worldcoin Foundation and Tools for Humanity have received a rap over the knuckles from South Korean authorities for the illegal collection and transfer of biometric data.

The Personal Information Protection Commission announced on Sept. 26 that it had imposed a fine of 1.1 billion Korean won ($850,000) against Worldcoin and its contributor Tools for Humanity.

The nation’s privacy watchdog said it started probing Worldcoin earlier after complaints and local media reports alleged the project of collecting biometric data in exchange for cryptocurrency without proper consent or legal basis.

The investigation found that the Worldcoin Foundation and Tools for Humanity, which managed the World App cryptocurrency wallet, violated South Korean laws by illegally collecting iris data from nearly 30,000 Korean users without proper consent or legal basis. 

Additionally, Worldcoin had transferred this biometric data abroad without informing users of the recipient countries or contact details, as required by local regulations. The Worldcoin Foundation also failed to provide clear notifications about the data’s purpose, retention period and other mandatory details, the commission said. The consent form was initially available only in English, limiting understanding for local users until a Korean version was released in March.

In its defense, Worldcoin argued that the iris code data was used solely to prevent duplicate registrations and could not identify individuals, suggesting it was anonymous. However, the commission rejected this claim, emphasizing that the iris code data was inherently unique, immutable and directly linked to the individual.

Worldcoin’s controversial iris scanning has drawn the attention of regulatory bodies including from India, Hong Kong and Germany.

Singapore has revealed that it opened an investigation into individuals suspected of offering buying and selling services related to Worldcoin, but Tools for Humanity told Cointelegraph in a previous interview that these suspects are not affiliated with Worldcoin in any way.

Global regulatory scrutiny isn’t stopping Worldcoin’s expansion. On Sept. 25, Worldcoin announced the launch of its orb verifications in Guatemala, Malaysia and Poland. 

Malaysia’s government is one of the rare instances where the government has embraced the iris scanning technology. 

In August, the government’s research department signed a memorandum of understanding with the Worldcoin Foundation to integrate its technology into the country’s digital infrastructure.

Crypto trading store clerk vanishes with half a million dollars

Hong Kong police have reportedly arrested two men linked with a theft case involving 4 million Hong Kong dollars (around $500,000) that occurred at a cryptocurrency exchange store in the Sham Shui Po district.

According to local media, a 43-year-old man carried cash into a physical cryptocurrency trading store in a shopping mall on Sept. 23 afternoon. When the victim handed the cash to a female store clerk, she entered a room inside the shop. 

The clerk did not return and the man found himself locked inside the shop.

The police subsequently arrested two men, aged 23 and 30. The suspects, along with the female clerk and other individuals, were allegedly involved in setting up the cryptocurrency exchange store to steal cash from customers during transactions.

The victim had previously made two successful transactions involving approximately 400,000 Hong Kong dollars ($51,400) and 800,000 ($102,800) Hong Kong dollars in early September, which built his trust in the shop and led him to increase his investment to 4 million Hong Kong dollars.

According to the police, there were 12 other cases this year where victims visited shops to trade cash for crypto. These 12 cases resulted in a combined loss total of 10.8 million Hong Kong dollars ($1.4 million).

Japan bans DMM Bitcoin from reopening until risk measures implemented

Japanese authorities have issued a business improvement order against cryptocurrency exchange DMM Bitcoin following a major security breach that resulted in the theft of 4,502.9 BTC ($305 million at the time). 

The Kanto Local Finance Bureau demanded in an administrative action on Sept. 26 the company strengthen its system risk management, implement measures to prevent future outflows, and clarify management responsibilities. The exchange must submit a detailed improvement plan by Oct. 28 and is barred from reopening suspended services until it complies.

Regulators found lapses in DMM Bitcoin’s risk management and internal controls in May, which allowed hackers to siphon off customer funds.

The investigation revealed the exchange operated without a system risk manager, leaving its security protocols dangerously lax. Private keys were poorly managed, and staff lacked adequate oversight, leading to vulnerabilities that hackers exploited. 

Moreover, DMM Bitcoin failed to establish a proper log preservation system, hindering efforts to investigate the breach swiftly.

DMM Bitcoin’s security breach on May 31 is recorded as the largest hack of 2024 so far. It is widely believed that the North Korean state hacking group Lazarus was behind the cyberattack on the Japanese exchange.

Since then, Lazarus has been blamed for attacks on other Asian exchanges such as WazirX and Indodax.

This past week, the Singapore-based BingX became the latest major exchange to suffer an attack. The hacker behind the BingX attack has not yet been publicly identified.

However, on Sept 26, BingX stated that they “have determined that the same group responsible for other similar attacks in the industry is behind the current incident.”

Users protest Terraform Labs’ planned closure

Terra blockchain users have raised concerns that their tokens will be lost if Terraform Labs eventually shuts its services. 

“You cannot shut down station wallet, that is used to self custody and stake Luna, if you cannot transfer it to the community, then let people unstake all their tokens including the ones that have not fully vested yet,” one X user complained.

Terraform Labs is preparing to shut down several of its products and services by October 30 unless external parties intervene to keep them running.

In a Sept. 25 post on X, it announced that discussions with third parties are still ongoing to sell some of their products and services.

If these efforts are unsuccessful by the October 30 deadline, key products, including the Station Wallet, will be discontinued, giving users until then to wind down their activities.

Singapore-based Terraform Labs is the company behind the UST stablecoin that lost its peg from the greenback in May 2022, causing a $40 billion collapse of the Terra-Luna ecosystem, and subsequent contagion effects that impacted liquidations and bankruptcies of several cryptocurrency firms, like Three Arrows Capital and FTX.

In June, Terraform Labs announced that it would cease operations following a $4.47 billion settlement with the SEC.

Source : Cointelegraph - Sep 27, 2024