China Raises Red Flags Over Crypto Tokens Used to Lure Iris Scans and Collect Sensitive Data: Is This the Next Worldcoin Controversy?

China Raises Alarm Over Foreign Firms Using Crypto Rewards To Harvest Iris Data

A new warning from China’s Ministry of State Security (MSS) has put foreign crypto-linked identity projects under sharp scrutiny, accusing unnamed companies of luring citizens into handing over their iris data in exchange for digital tokens.

While the agency did not directly mention any specific company, the description closely aligns with Worldcoin, the controversial biometric identity initiative co-founded by OpenAI CEO Sam Altman.

The MSS’s advisory, posted on its official WeChat channel on 6 August, points to serious risks to both personal privacy and national security.

Crypto Rewards Used As Bait For Biometric Collection

According to the ministry, certain foreign entities have launched programs that entice users with cryptocurrency tokens in exchange for scanning their irises.

These scans, collected across multiple countries, were then reportedly transferred overseas without proper controls.

The MSS said these activities present a clear threat, warning that once biometric data is sent abroad, it may be exploited for espionage, surveillance, or even identity forgery.

The agency said,

“Improper storage of relevant data can lead to leaks, which not only endanger personal privacy and property security but also pose a threat to national security.”

Deepfake Threats And Espionage Concerns Emerge

Chinese security officials raised particular concerns around the misuse of facial and iris data by foreign intelligence agencies.

They cited prior cases where stolen biometric records were used to produce deepfake identities, which then enabled infiltration of high-security areas.

In one incident, facial data was reportedly repurposed by foreign spies to impersonate authorised personnel and gain access to restricted facilities inside China.

Another case involved a fingerprint payment system linked to a corporate database, which was repeatedly breached due to weak cybersecurity, leading to significant data leaks.

Iris Scans Deemed Especially Sensitive

The ministry singled out iris data as among the most valuable and vulnerable forms of biometric information.

Source: Freepik

Unlike passwords, iris patterns cannot be changed once compromised.

Their stability and uniqueness make them highly sought after for authentication in sensitive environments—from finance to border control.

The MSS warned that these features also make iris scans an attractive target for cybercriminals and foreign actors.

If abused, they could enable long-term digital impersonation, especially within systems that rely heavily on biometric identification.

Privacy Trade-Offs Hidden Behind Free Tokens

Projects like Worldcoin typically require users to undergo a biometric verification process—including iris scanning—to access free tokens or join the network.

While these incentives are framed as promoting digital financial inclusion, the MSS expressed concern that users may be unknowingly surrendering sensitive data in exchange for a short-term reward.

The ministry urged the public to be cautious when engaging with foreign tech platforms, particularly those offering financial rewards in return for biometric data.

Citizens, it said, should always ask how their personal data will be stored, used, and protected, and to remain alert for any signs of excessive or unclear data collection practices.

Worldcoin Under Global Scrutiny

The MSS’s warning adds to mounting international pressure on Worldcoin, which has already faced regulatory action in France, Germany, and Kenya.

Authorities in those countries have questioned the project’s approach to informed consent, data storage, and the potential surveillance implications of mass biometric collection.

On 6 August, following China’s advisory, Worldcoin’s token WLD dropped 3.32%, trading at $0.9367.

The token has seen significant volatility in recent months amid ongoing concerns about the project's legality and ethics.

Will Biometric Crypto Projects Withstand Growing Security Fears?

Coinlive views this warning as a clear sign that combining biometric data with crypto rewards brings complex privacy and security risks.

The very elements that make projects like Worldcoin innovative, unique identity verification and mass adoption through token rewards, also expose them to unprecedented risks.

In a world increasingly wary of data misuse and surveillance, can such ventures overcome deep-rooted trust issues and regulatory hurdles to carve out a sustainable future?

Their survival may depend less on technology and more on addressing these fundamental concerns head-on.

As of now, Worldcoin has not issued a public statement in response to the MSS warning.