Central Bank warns of illegality of cryptocurrency use as Worldcoin signs up participants

Ecuador’s Central Bank is warning residents of the dangers of conducting business in cryptocurrencies, pointing out the volatility of digital money and that its use is illegal in Ecuador.

Those who join the Worldcoin program are required to undergo a biometric iris scan as part of the cryptocurrency’s World ID plan.

The warning came two months after Worldcoin, a crypto project of U.S. billionaire Sam Altman, announced it was beginning operations in Ecuador. Altman, who made a short visit to Quito, said World ID verifications, a pre-requisite for using Worldcoin, would be conducted in six locations in Quito and Guayaquil. The World ID requires an iris scan

Despite the warnings, Worldcoin has rapidly gained popularity among Ecuadorians as hundreds have queued up daily outside scanning stations. However, local media outlets report that many of those who have agreed to the scans received almost no explanation of why the procedure was necessary and how the data will be used.

“Very few of those who agreed to the scan understood the full implication of participation,” said Guayaquil radio reporter Jorge Sanchez. “All they knew was that they would receive $30 of Worldcoin credit and that they could establish a digital wallet that they could use for transactions. Most of them didn’t know that the World ID verification will be used for many projects, not just Worldcoin.”

Sanchez said that those who agreed to the ID scan would be automatically enrolled in the international “Tools for Humanity Initiative” which promised a variety of “economic opportunities” in the future.

He added: “Some of those I talked to thought that joining Worldcoin would bring them instant wealth.”

A 19-year-old Sanchez talked to told him that he was promised a $100 referral bonus for everyone he brought into the program.

Ecuador’s Data Protection Superintendency (DPS) denied the claims for Worldcoin and Tools for Humanity but said it had been unable as of August 14 to interview those who had signed up. “We are gathering information about this and assessing its legality,” said DPS Superintendent Fabrizio Peralta. “Among our questions is whether those agreeing to the iris scan understand that the use of cryptocurrencies is illegal in Ecuador.” Another of the agency’s questions, he says, is whether those who sign up understand the purpose of the Tools for Humanity program.

Peralta said DPS has been unable to conduct surveillance or interviews at the six scanning locations due to a lack of personnel and resources.

Peralta said he could not comment on Worldcoin’s claim that it had notified Ecuadorian authorities about its operations in the country and had received approval. “I am attempting to determine which agency was allegedly contacted by Worldcoin or how an approval was issued.”

The Central Bank has joined the investigation following notification by DPS, Peralta said.