Tools for Humanity Faces Financial Probes, Regulatory Battles, and Layoffs
The iris-scanning startup co-founded by OpenAI CEO Sam Altman is under intense scrutiny across multiple fronts.
Internal investigations, regulatory roadblocks in several countries, and a recent workforce reduction are compounding challenges for the company.
Internal Investigations
According to sources familiar with the matter, Tools for Humanity hired two separate law firms last year to investigate allegations of financial irregularities and potential violations of the U.S. Foreign Corrupt Practices Act (FCPA) in Thailand.
- O'Melveny & Myers conducted an investigation into concerns raised by a staff member regarding potential misuse of company funds. Allegations included personal expenses and corporate housing charged on company credit cards, as well as alleged misclassification of full-time employees as contractors.
- Sidley Austin was engaged to investigate whether the company's business dealings in Thailand violated the FCPA.
As a result of these investigations, the company severed ties with a business partner in Thailand and stated that it strengthened its policies and internal controls. A company spokesperson said, "When concerns are raised, we take them seriously, engage independent outside experts to review them when appropriate, and take action as warranted."
The spokesperson added that the company is "committed to conducting business ethically around the world and adhering to the law wherever we operate." The company has stated it is not aware of any facts establishing a violation of the FCPA by the company or its employees.
Background on Thailand Operations
The company's rollout in Thailand involved a partner linked to South African businessman Benjamin Mauerberger, whom U.S. and Thai officials have accused of involvement in transnational cyber-fraud scams.
Workforce Reduction
In June, the company announced layoffs affecting less than 15% of its global workforce. TechCrunch has contacted Tools for Humanity for confirmation.
Regulatory and Financial Context
Tools for Humanity operates the World verification project, which uses iris scans performed by a device called the "Orb" to verify human identity. The project aims to distinguish human activity from bot activity and supports the trade of its cryptocurrency, Worldcoin. The company has raised funds at a $2.5 billion valuation from investors including Andreessen Horowitz and Bain Capital.
The company has faced regulatory and ethical scrutiny in multiple countries.
- In Kenya, India, and Hong Kong, individuals were offered approximately $50 in Worldcoin in exchange for their biometric data.
- Kenya subsequently banned World from operating, citing privacy and financial concerns.
- South Korea fined the company $830,000 for alleged violations of local privacy law.
- The company has also faced regulatory roadblocks in Spain, India, and Indonesia.
The value of the Worldcoin token has declined 95% since its peak in March 2024, trading at about 61 cents.