Worldcoin Boost Biometric Security with New SMPC System, Trader Blasts Sam Altman’s WLD
Top trader Defisquared criticizes Altman's Worldcoin's tokenomics, alleging predatory practices that favor insiders over retail investors. | Credit: Justin Sullivan/Getty Images
Key Takeaways
- Worldcoin Foundation implements a new system using SMPC to protect biometric templates’ privacy.
- It can verify someone’s uniqueness without having to decrypt biometric data.
- A leading criticized Worldcoin’s tokenomics, alleging predatory practices that favor insiders over investors.
- Defisquared warned of massive sell-off pressure as insider token unlocks approach, potentially affecting WLD’s value.
The Worldcoin Foundation has recently put a a new verification system in place. The new method uses Secure Multi-Party Computation (SMPC) biometric templates, developed with TACEO cryptography engineers.
This means Worldcoin no longer uses its former, controversial, iris code system. This development comes in response to concerns from several countries regarding the foundation’s data collection methods.
Worldcoin Data Collection Overhaul
The new method encrypts iris codes into several secret shares, distributed among various parties. These parties then work together to perform computations on the encrypted data without ever accessing the actual underlying secrets.
According to the foundation:
“By migrating to SMPC, we’ve achieved a significant enhancement in privacy protection for our users. After securely transferring all iris codes to the new system, we deleted the old data.”
The shift to this new system was finalized in March 2024, with the previous iris code system being securely decommissioned in May 2024 after thorough testing. The new system demands significant computational resources, including 1152 cores, 3.6TB of memory, and 5 Gbps of bandwidth shared among all participating parties.
Regulatory Problems
This development was influenced by discussions with data protection authorities, notably the Bavarian Data Protection Authority (BayLDA). Tools for Humanity and the Worldcoin Foundation’s EU branch are also actively participating in the SMPC system. Meanwhile the inclusion of additional third-party participants is currently under evaluation.
The announcement follows regulatory challenges Worldcoin has encountered in various countries. These by concerns over data privacy and security practices. Authorities in several regions have questioned the adequacy of Worldcoin’s measures to protect user data. As a result, the foundation sped up the adoption of more sophisticated privacy technology.
Worldcoin’s use of SMPC is part of a broader initiative to enhance privacy and security. In 2024, the foundation introduced extra measures. These included
- Personal custody options for secure information storage.
- The ability for users to delete their iris codes.
- On-site age verification.
Worldcoin Wealth Transfer May Favor Insiders Over Investors
Defisquared, the top-ranked trader on Bybit, expressed skepticism about the potential success of the Sam Altman-backed Worldcoin. The project aims to orchestrate the “greatest transfer of wealth of this entire cycle”. However, Defisquared says this wealth transfer is more likely to benefit the Worldcoin team and insiders rather than the broader investor community.
In a tweet , Defisquared said many investors might not fully grasp the extent to which the project’s token, WLD, could be sold off as “unlocks continue to ramp up in the coming months”. The trader claimed WLD, which has a fully diluted valuation of about $60 billion, is experiencing a daily devaluation of 0.6% due to grants and operator claims.
He wrote:
“At its current $60 billion fully diluted valuation, right now it is being devalued by 0.6% a day from emissions of grant and operator claims (the majority of which are sold almost immediately based on onchain analytics).”
A lot of the crypto Twitter, including ZachXBT, a crypto trader known for exposing NFT projects and rug pulls, appeared to agree. ZachXBT, went even further, calling Worldcoin a scam.
Worldcoin did not immediately respond to a request for comment.
The Bankman-Fried Factor
Defisquared criticized the Worldcoin Foundation’s strategy to sell WLD tokens worth $200 million to trading firms. They suggested insiders were seeking to enrich themselves at the expense of ordinary token holders. Defisquared also claimed the project’s community tokens will be sold to parties that would ultimately benefit the foundation rather than the community.
The trader also pointed to the project’s tokenomics, likening them to tactics “straight out of” Sam Bankman-Fried’s playbook.
Defisquared stated :
“Make no mistake- coins like this were designed from the start to have predatory tokenomics that benefit the team and early investors, and back in December the Foundation intentionally ended the market maker contract that was preventing the price from squeezing higher on low float.
“The manipulative low float / high FDV design is straight out of the SBF playbook, and directly enriches insiders as they hedge their locked allocations at high valuations pre-unlock via perps / OTC; yet retail somehow sadly still think they’re beating the system trying to push the price up.”
Defisquared Slams Worldcoin’s “Fake AI Coin” Hype, Predicts Massive Sell-Off Pressure Amidst Insider Unlocks
He also highlighted an alarming scenario. In just 70 days, when venture capital and team unlocks begin, the WLD supply should rise 4% daily due to unlocks and emissions. This could result in nearly $50 million a day of continuous selling pressure on a coin that insiders are hoping to sell at a fully diluted valuation of $60 billion.
Also, in the same post, Defisquared criticized the promoters of the project for using Open AI co-founder Sam Altman’s previous endorsement of Worldcoin to enhance the token’s appeal.
The trader expressed disdain for this tactic. They argued that promoting what they called a “fake AI coin at $60 billion” to ordinary investors was highly questionable ethically.
According to him:
“Most retail buyers are likely not even aware that Sam Altman currently has no active involvement in Worldcoin and that it’s a completely disjoint entity with no relation to OpenAI at all. With this in mind, it takes a questionable moral compass to encourage mom and pop retail who don’t understand FDV and inflation to buy a fake AI coin at $60 billion. Bear this in mind if you see a strategically timed announcements between now and insider unlocks in July- it’s sadly not a new play in this industry, but serves to ensure exit liquidity for insiders at eye watering valuations.”
Sam Altman Negotiates Worldcoin (WLD) x OpenAI Partnership Despite Regulatory Concerns
