The Kenyan government has barred the eyeball-scanning Worldcoin cryptocurrency project from recruiting new customers as it investigates data privacy and security concerns.

Kenya’s interior ministry said the venture must stop collecting user data after raising a number of issues including: concerns over the secure storage of data that includes scans of a user’s iris; that offering crypto in exchange for data “borders on inducement”; inadequate information on cybersecurity safeguards; and placing large amounts of private data in the hands of a private business.

Worldcoin requires customers to have their eyes scanned in order to prove their “humanness” and distinguish them from artificial intelligence systems. Kenyans have been offered free Worldcoin tokens worth about 7,000 Kenyan shillings (£39) in order to sign up, with the project making a similar offer in other countries. Local media have reported that more than 350,000 Kenyans had signed up for Worldcoin as of Tuesday this week.

The Worldcoin project, co-founded by the chief executive of ChatGPT developer OpenAI, Sam Altman, launched last week. It requires users to give their iris scans in exchange for a digital ID, and according to its co-founders could ultimately be the basis for a universal basic income funded by AI.

Kenya’s interior ministry said on Wednesday that it had suspended the local activities of Worldcoin while government agencies assess potential risks to public safety.

“Relevant security, financial services and data protection agencies have commenced inquiries and investigations to establish the authenticity and legality of the aforesaid activities,” said the Kenyan interior minister, Kithure Kindiki, in a statement.

A preliminary review of Worldcoin’s operations has raised concerns, said the Communications Authority of Kenya and the Office of the Data Protection Commissioner in a further statement, among them being that obtaining consumer consent in return for a monetary award bordered on inducement. The statement cited similar concerns being voiced by authorities in German, France, India and UK, where the domestic data watchdog has said it will be “making further inquiries” about the project.

The Worldcoin Foundation, a Cayman Islands-based entity, said it would work with authorities to boost understanding of privacy measures it has in place in Kenya and elsewhere.

“Worldcoin remains committed to providing an inclusive, privacy-preserving, decentralised on-ramp to the global digital economy and looks forward to resuming its services in Kenya while working closely with local regulators and other stakeholders,” it said in a statement.