Important Information about the Worldcoin Project
Worldcoin Foundation, together with its subsidiary entities (collectively, “Worldcoin” or “we”, “us” or “our”), was established to support the Worldcoin protocol, a combination of software applications, hardware devices, blockchain-network based “smart contracts”, virtual assets, and various rules and procedures (together, the “Protocol”). The Worldcoin Foundation’s objective is to use the Protocol to support the growth of the world’s largest decentralized identity and financial network (the “Project”). The Protocol has been designed primarily as an open-source public utility, open to any and all who choose to use it. The Protocol is centered around a unique privacy-preserving global identity network, known as World ID (“World ID”), and a virtual asset, known as the Worldcoin token (“WLD”). The direction and governance of the Protocol will be steered by the decentralized community of WLD token holders, empowering them to shape the future of the Project. This inclusive ecosystem comprises developers, economists, technologists, and enthusiasts worldwide, all contributing collaboratively. Furthermore, the WLD token will serve as a versatile tool, enabling token holders not only to guide governance but also to facilitate future features of the WLD token within this ecosystem. The Protocol and its component elements, including the WLD token, are experimental technologies. As the Project becomes increasingly “decentralized” important governance decisions about the Project will be made by the community of WLD owners. Throughout this process, there will be significant uncertainties as to how these technologies will function at scale and the extent to which users around the world will find the project and the WLD token useful.
Although the Worldcoin Foundation hopes many people around the world will want to become involved with the Project, before engaging with the Project, including through accepting grants of WLD from Worldcoin or through acquiring WLD in secondary transactions from third parties, you should read the information below and ensure that you understand both the objectives of the Project and the various risks that may arise from engaging with it. The Project and the WLD token are intended only for informed users above the age of majority or legal age in any jurisdiction applicable to them who can understand and accept both the anticipated benefits and related risks of engaging with the Protocol. The Project is being made available to you by Worldcoin without charge on an “as is” basis and neither Worldcoin nor any other entity makes any warranties to users about the Project or its components. More information about the Project and your use of the Protocol, including important disclaimers of legal liability can be found in our Terms of Service.
The Protocol is an experimental open-source project and is under continuous development by a variety of stakeholders including, but not limited to, Worldcoin. The Protocol may never achieve significant user interest or the scale or usability necessary to attract the participation of significant numbers of third-party developers and users. It is possible that current features of the Protocol may not function as anticipated or may temporarily or permanently cease functionality. The can be no assurance that the Protocol will function as expected at any given time or that the Protocol will be able to achieve long-term viability. Some of the technological solutions that comprise the Protocol are new and/or relatively untested. As a result, some or all of these technologies may not operate as expected. In addition, if functional at any time, this functionality may be impaired by subsequent changes made through the Project’s governance process.
Individuals may be hesitant to provide their personal or biometric data to a new and unknown project or may not trust or understand the potential value of WLD tokens and the Protocol. Additionally, acceptance of the WLD tokens distributed by World Asset Ltd. requires that there be outlets to transfer WLD tokens to others or to spend tokens as a form of payment, which may not develop or grow with sufficient scale to support successful growth and adoption of the Protocol.
As an open-source project, one or more stakeholders, including the Worldcoin Foundation, may find it impossible or uneconomic to continue to engage with, and otherwise support, the Project. In the case of the Worldcoin Foundation, this could result from a decline in the value of the WLD held by Worldcoin, a loss of some or all of the WLD held by Worldcoin (whether due to an exploit, inadvertence or otherwise), the costs of supporting the Project exceeding the Worldcoin's available resources, unanticipated external liabilities, adverse regulatory action or other reasons. Should this occur, those WLD that have already been distributed will continue to exist on the relevant blockchain network and it will be up to the community of users and other stakeholders to continue to support the Project. In this case, it is possible that owners of WLD may no longer be able to utilize their tokens or realize any value from WLD they purchased or hold.
WLD tokens are technological tools that allow you to interact with the Protocol and may in the future be useable to make payments. WLD tokens do not convey any ownership rights to you, whether in the Worldcoin Foundation, World Assets Ltd. or any other legal entity.
WLD tokens were designed to be used as a global internet currency and, as the Project’s decentralization process continues, as a means of providing direction in Protocol governance. WLD tokens are not investment products. There should be no expectation of future profit or gain from the purchase or sale of the WLD tokens. The WLD tokens do not represent any equity or other ownership interest in Worldcoin Foundation, World Assets Ltd. or any other entity, or any right to dividends or other distribution rights from any such entity.
When initially distributed to users, WLD tokens had no immediate monetary value. Although trading markets for WLD tokens have developed, the monetary value of WLD tokens will likely to be highly changeable based on factors relating to the Project, the overall market for cryptocurrencies and virtual assets such as bitcoin and ether, or geopolitical or macroeconomic events. Users should only hold as much value in WLD tokens as they are prepared to lose.
WLD tokens are simply numerical ledger entries that have no inherent monetary value whatsoever. Any monetary value that WLD tokens have will likely be based primarily on the current, or anticipated future, demand for WLD tokens as a means of payment or for use of other functionalities of the Protocol. The prices of cryptocurrencies and virtual assets have historically been subject to dramatic fluctuations and are highly volatile, which has deterred widespread adoption of cryptocurrency and virtual assets networks for day-to-day transactions or reliable means of exchange. The current market price for WLD tokens has been, and will likely continue to be, highly volatile based on factors relating to the Project, the overall market for cryptocurrencies and virtual assets such as bitcoin and ether, and/or geopolitical or macroeconomic events.
In addition, “market” prices for WLD tokens published on the Internet may not be available from a marketplace available in your jurisdiction. Purported market prices may also be subject to distortion based on the manipulative activities of others, including self-dealing or wash-trading transactions, making it difficult to accurately assess the value of WLD for use in commercial transactions at any given time. Also, as discussed above, regulatory uncertainty applicable to virtual asset marketplaces may impact the venues on which you may be able to dispose of WLD tokens you or other users have received, purchased, or accepted in trade.
Further, virtual assets such as WLD have only recently become accepted as a means of payment for goods and services by certain major retail and commercial outlets, and use of virtual assets by consumers to pay such retail and commercial outlets remains limited, particularly in the countries where WLD has gained relatively higher levels of adoption. Conversely, to date a significant portion of virtual asset demand has been generated by speculators and investors seeking to profit from the short- or long-term holding of virtual assets. For the Project to be successful, users across many jurisdictions would need to engage with the Protocol and adopt WLD tokens as a means of payment or for other practical uses. If this does not occur, it is possible that, over time, WLD tokens may have little or no traditional monetary value.
WLD tokens are ledger entries at a particular “public address” on a blockchain network, such as the Optimism network, and ownership of WLD tokens refers to the ability to control transfers of the WLD tokens through knowledge of a “private key” associated with that public address. If you have not properly secured the relevant private key for your WLD tokens in a software or hardware “wallet” to which you have access, you may permanently lose access to your WLD tokens.
At this time, all WLD tokens minted and distributed by World Assets Ltd. will made through the World App, the first Protocol-compatible wallet, created and maintained by Tools for Humanity, a U.S.-based company involved in the development of the Project. The World App is what is known as a “self-hosted” wallet, meaning that neither Tools for Humanity nor Worldcoin Foundation or any other party will have access to the private key for any WLD tokens you own. Accordingly, the loss of your private key(s) associated with WLD tokens, whether such key(s) are stored in the World App, in another digital wallet you control, at a virtual asset marketplace, or by another means you have adopted for storing your private key(s), will result in the permanent and irretrievable loss of your WLD tokens. In addition, if a third party gains access to your private key(s), including by gaining unauthorized access to your self-hosted wallet or to the login credentials of a hosted wallet or vault service you use, that third party may be able to irretrievably misappropriate your WLD tokens. Neither Worldcoin Foundation nor any other party will be able to recover your WLD tokens for you.
In addition, any errors or malfunctions caused by, or otherwise related, to the digital wallet or vault at which you choose to receive and store the private key(s) associated with WLD tokens, including your own failure to properly maintain or use such digital wallet or vault, may also result in the loss of your WLD tokens. Additionally, your failure to follow precisely the procedures set forth for buying and receiving WLD tokens may also result in the loss of your WLD tokens.
The tax characterization and treatment of the WLD tokens and their use is uncertain in many jurisdictions and may adversely affect the value of WLD tokens to you.
The tax characterization of the WLD tokens is uncertain, and you should seek your own tax advice in all jurisdictions relevant to you in connection with your ownership and use of the WLD tokens. A purchase of WLD tokens from a third-party marketplace or a disposal by you of WLD tokens you received from us may result in adverse tax consequences to you in your jurisdiction, including withholding taxes, income taxes and tax reporting requirements. Further, the use of the WLD tokens as a form of currency may or may not be subject to income taxes, capital gains taxes, value added, sales or use taxes or other forms of taxes. The uncertainty in the tax treatment of the WLD tokens and transactions in the WLD tokens may discourage others from seeking to accept WLD tokens from you in commercial transactions or purchase WLD tokens from you in a virtual asset marketplace or other setting, potentially decreasing or eliminating any monetary value the WLD tokens may have.
The regulatory framework applicable to the Protocol and the WLD token is highly uncertain in many jurisdictions.
The regulatory status of blockchain networks, cryptographic or virtual asset tokens such as WLD, other virtual assets, biometric verification and identification devices and processes, and blockchain technology is unclear or unsettled in many jurisdictions. It is difficult to predict how or whether governmental authorities will ultimately regulate such technologies. It is likewise difficult to predict how or whether any governmental authority may make changes to existing laws, regulations and/or rules that will affect cryptographic or virtual asset tokens, virtual assets, biometric verification and identification devices and processes, blockchain technology and its applications or how they may choose to enforce compliance with regulatory regimes that may be applicable to the Protocol or the WLD token.
Developments or changes in regulatory treatment or unanticipated enforcement activity could negatively affect the WLD tokens in various ways, including, for example, through a determination that the verification mechanism is unlawful under data protection regulations, that the WLD tokens are regulated financial instruments that require registration or licensing of those instruments or some or all of the parties involved in the sale, purchase and delivery thereof, or that owners of tokens who are involved in the governance of a protocol may have responsibility for losses to third parties interacting with that Protocol. Any such determination may result in a pause or termination of WLD distribution by World Asset Ltd. or of the Project itself.
Public policy towards token distributions and virtual assets is evolving, and it is conceivable that regulators may in the future seek to broaden the scope of regulation of token distributions or virtual assets or interpret existing regulations in a way that adversely impacts the Project. If the offer, distribution and/or sale of the tokens becomes subject to registration, prospectus, or licensing requirements in a particular jurisdiction, the utility of the WLD tokens in that jurisdiction may be adversely affected. Developments such as these may also impact the practicability of our continuing to support the Project.
Certain jurisdictions, including the European Union, China, Russia, and Turkey have already adopted laws, regulations or directives that may affect the Ethereum and Optimism blockchain networks, in general, and the Project (including the issuance of WLD), in particular. For instance, the European Union has ratified the Markets in Crypto-Assets (MiCA) Regulation, and the Cayman Islands and British Virgin Islands have enacted legislation, governing the licensing and registration, as the case may be, of virtual asset businesses. China has adopted certain regulations prohibiting certain distributions of certain virtual assets as well as their ownership, while other countries, like India, are reportedly seriously considering such bans. Legislation impacting the distribution, trading and use of virtual assets has also been proposed in both houses of the U.S. Congress. These laws, regulations or directives may directly and negatively impact the functionalities of the Protocol or the utility of any WLD tokens you may own.
The technology underlying the Protocol may have flaws or errors or may otherwise fail to function as intended, which could negatively impact the Protocol’s usefulness to you or the willingness of new users to engage with the Protocol.
The Protocol may have coding errors or otherwise not function as intended, which may negatively affect your use of the Protocol and/or the functionality of the WLD tokens. Changes to the Protocol may have unintended adverse effects on the WLD tokens. It will be up to Project governance as to whether any coding errors or unintended functionalities in the Protocol that may be discovered remain unresolved or are addressed in some manner.
The Protocol may be the target of malicious cyberattacks or may contain exploitable flaws in its underlying code, or may be the target of other attacks to its integrity, any of which may result in security breaches. This may result in the security of the Protocol being compromised or the Protocol being subjected to attacks that frustrate or thwart its use.
The Protocol’s open-source structure and the various software applications and other interfaces built on the Protocol are still in an early development stage and are unproven. Neither Worldcoin Foundation nor any other party is able to provide you with assurances that the Protocol and the means of creating, transferring, or storing WLD tokens will be uninterrupted or fully secure. This may reduce the interest in, or use of, the Protocol and the WLD tokens. The Protocol or the WLD tokens could be subject to security attacks, including but not limited to double-spend attacks, 51% attacks, or other malicious attacks, which could materially and adversely affect any WLD tokens you own or the Protocol itself.
The Protocol may also be the target of malicious social or presentation attacks, or the hardware associated with user adoption may possess vulnerabilities, which may result in unauthorized access to the Protocol or applications built on the Protocol or other security breaches. If the Protocol’s integrity is perceived to be in question or compromised, the reputation of the Project may suffer and users may decline to adopt, cut back on, or stop using the Protocol.
The success of the Project depends significantly on the Worldcoin Foundation’s ability to produce, distribute, and service a hardware device, known as the Orb, and its related software, which is used to produce a unique verified code, known as a World ID, for each user.
The success of the Project depends in large part on the Worldcoin Foundation’s ability to continue to manufacture and market the Orb hardware device and its related software in an economically and logistically practicable way. Worldcoin Foundation currently relies on Tools for Humanity to manufacture and distribute Orbs under license from us. It is unclear whether Tools for Humanity will be able to continue to obtain reliable sources of component supply and provide sufficient and satisfactory manufacturing capacity that will enable the Worldcoin Foundation to meet our quality, price, engineering, design and production standards, as well as the production volumes expected by the Worldcoin Foundation to successfully meet our user onboarding objectives. Failure of Tools for Humanity to deliver sufficient numbers of Orbs to designated jurisdictions or significant delays and/or cost overruns, including as a result of factors beyond the control of Worldcoin Foundation, Tools for Humanity or any other party, such as problems with downstream suppliers and vendors, could slow the process of onboarding new users and potentially reduce global interest or confidence in the Project, which could adversely impact any traditional monetary value there may be in WLD tokens.
The Worldcoin Foundation may use third-party service providers for certain services, including identifying and vetting operators of Orbs, and any interruptions in services provided by these third parties may impair the Worldcoin Foundation’s ability to support the Protocol.
In addition to the production of Orbs, the Worldcoin Foundation currently relies on, and may in the future continue to rely on, various third parties, including Tools for Humanity, in connection with other aspects of the Project. This includes identifying and vetting operators of Orbs who are the persons directly responsible for using the Orb to onboard new users and certain software development projects.
Adoption and use of the Protocol in a given jurisdiction significantly depends on attracting qualified persons or entities to introduce potential users to the Protocol. It may be challenging for Worldcoin Foundation to maintain qualified persons to undertake this task if the cost of utilizing such persons exceeds what is economically feasible for Worldcoin Foundation to directly or indirectly pay, or if the cost to acquire, rent and/or operate the Orbs is prohibitively expensive for those seeking to operate them in a given jurisdiction. In such an event, there can be no assurance that other providers will succeed to these functions. Various factors could result in an undersupply or total lack of availability of qualified persons to perform these functions in one or more jurisdictions, impeding adoption and, potentially, the benefits of the Protocol.
If security or data privacy breaches occur or if there are incidents of other unauthorized or improper access to, use of, or destruction of user data, the ability of the Project to continue functioning could be disrupted or terminated.
As part of the Project, the Worldcoin Foundation, or Tools for Humanity on behalf of Worldcoin Foundation, may collect certain categories of personal data, including sensitive personal data, for permissible purposes such as to comply with any applicable legal KYC/ AML requirements. Any failure to prevent or mitigate security breaches or improper access to, use of, or disclosure of any such data could adversely affect the Project, including through a diminished ability to retain or attract new users, and disruption to our operations. The Worldcoin Foundation may use third-party service providers to host or otherwise process some of the data the Worldcoin Foundation collects and any failure by such third parties to prevent or mitigate security breaches or improper access to, or disclosure of, such information could have similar adverse consequences on the Project. This risk is enhanced in certain jurisdictions with stringent data privacy laws.]
The global benefits of the Protocol depend on the successful ongoing operation of Orbs to onboard new users. Operating Orbs may be unfamiliar to both operators and users in various jurisdictions and Orbs could be misused by those operating them.
There can be no assurance that Orb operators, users or other third parties will be able to operate the Orbs properly. Any accidents, injuries or damages resulting from such failure to operate the Orbs properly could harm the Project’s reputation, result in adverse publicity for the Project, and have a negative effect on the ongoing adoption and use of the Protocol.
We are not able to control or predict the actions of Orb operators, users or third parties, and we may be unable to protect or provide a safe environment for these operators, Protocol users, or third parties seeking to interact with the Protocol or accept WLD tokens for payment as a result of certain actions by operators, users, or other third parties. Such actions may result in injuries, property damage, or loss of life for operators, users and third parties, reputational damage to the Project, or significant liabilities for us. Although the Worldcoin Foundation currently oversees a third-party vendor, Tools for Humanity, that administers certain qualification processes for operators, these qualification processes may not expose all potentially relevant information and are limited in certain jurisdictions according to national and local laws. Any third-party service providers used by the Worldcoin Foundation may fail to provide the necessary services adequately or may disclose information that could be relevant to a determination of eligibility. Consequently, there could be complaints, as well as actual or threatened legal action related to operator conduct which could adversely affect the Project.
If operators, or individuals impersonating operators, engage in criminal activity, misconduct, or inappropriate conduct or use the Protocol as a conduit for criminal activity, consumers may not consider the Protocol or applications built on the Protocol safe, and the Project may receive negative press coverage as a result of our use of such operators, which would adversely impact the adoption or even the viability of the Project.