Tools for Humanity, the iris-scanning startup cofounded by OpenAI CEO Sam Altman, launched internal investigations into allegations of financial irregularities and potential bribery of foreign officials in Thailand, according to reporting from Business Insider. The company engaged two major law firms, O'Melveny & Myers and Sidley Austin, to examine concerns ranging from misuse of company funds to potential violations of federal anti-bribery laws.

What Triggered the Internal Investigations at Tools for Humanity?

The investigations centered on two main areas of concern. One probe examined Tools for Humanity's operations in Thailand, specifically its partnership with a company linked to South African businessman Benjamin Mauerberger, also known as Ben Smith. Thai courts have seized assets belonging to Mauerberger and issued an arrest warrant for him on fraud and money laundering charges related to an alleged transnational scam network. A bill advanced by the House Foreign Affairs Committee in December named Mauerberger on a list of foreign nationals who could face sanctions for alleged involvement in "pig butchering" scams.

The second investigation, conducted by O'Melveny & Myers, looked into concerns raised by company staff about potential misuse of company funds. This included allegations of personal expenses and corporate housing charged on company credit cards, as well as the misclassification of full-time employees as contractors to lower their tax burden. The company's auditing firm, BDO, also examined these financial concerns.

A third area of scrutiny involved allegations that senior company leaders approved six- and seven-figure payments to a foreign firm to boost the value of the Worldcoin token, a potential violation of Securities and Exchange Commission (SEC) rules. The SEC regulates financial markets and enforces laws against securities fraud.

How Did Tools for Humanity Respond to the Allegations?

Following the investigations, Tools for Humanity severed ties with its business partner in Thailand and strengthened its internal policies and controls. The company stated it is not aware of any facts establishing a violation of the Foreign Corrupt Practices Act (FCPA), a federal law that prohibits companies from paying, offering, or promising bribes to foreign officials to obtain or retain business. Violations can result in hefty fines and prison time.

A Tools for Humanity spokesperson explained the company's approach to addressing concerns: "When concerns are raised, we take them seriously, engage independent outside experts to review them when appropriate, and take action as warranted based on what we learn, as we are doing here." The company also emphasized its commitment to ethical business practices, stating: "We are committed to conducting business ethically around the world and adhering to the law wherever we operate. We maintain robust policies and practices designed to support that commitment, we enforce them, and we strengthen them when we identify areas for improvement".

Regarding the Thailand partnership specifically, the company acknowledged that it "entered into business with a partner in the region linked to an individual about whom serious allegations later emerged, but who had provided us with a false name and about whom those allegations were not known at the time." Once the company learned of the allegations, it retained Sidley Austin to investigate, severed ties, and implemented more robust due diligence measures for vetting business partners.

What Is Tools for Humanity and Why Does It Matter?

Tools for Humanity was cofounded in 2019 by Altman and Alex Blania, then a young physics researcher at Caltech. The company builds tools for the Cayman Islands-based World Foundation, which distributes the Worldcoin cryptocurrency token and aims to develop a global identity and financial network. The company's core product is the "Orb," a volleyball-sized sphere that performs iris scans to distinguish humans from artificial intelligence bots.

Valued at $2.5 billion in 2023, Tools for Humanity has raised hundreds of millions of dollars from prominent investors including Andreessen Horowitz, Bain Capital, and Khosla Ventures. However, the company has faced significant regulatory challenges and public scrutiny. It has been barred, paused, or investigated in multiple countries, including Spain, India, and Indonesia. In November, the company halted operations in Thailand following an order from the country's Personal Data Protection Committee over concerns about the collection of biometric data.

The Worldcoin token itself has experienced dramatic volatility. The token's value stood at around 61 cents, representing a 95% decline from its peak of $11.79 in March 2024, according to Coinbase data.

Steps to Understanding the Regulatory Landscape Around Biometric Data Collection

• Foreign Corrupt Practices Act Compliance: Companies operating internationally must ensure they do not pay, offer, or promise bribes to foreign officials. Violations can result in criminal charges and substantial fines, making FCPA compliance critical for global operations.
• Biometric Data Protection Regulations: Countries like Thailand have established personal data protection committees that oversee the collection and use of sensitive biometric information such as iris scans, requiring companies to meet strict privacy and security standards.
• Business Partner Due Diligence: Companies must conduct thorough background checks on international partners and verify their identities and business practices to avoid inadvertently partnering with individuals or entities involved in fraud or other illegal activities.
• SEC Securities Regulations: Token-related payments and compensation structures must comply with SEC rules to avoid violations related to securities fraud or improper financial transactions.

Tools for Humanity has also faced internal challenges. The company has been criticized for its all-or-nothing work culture, and a slew of high-level staffers have left over the past year. In June, the company announced layoffs affecting less than 15% of its global workforce of roughly 500 people. The company recently entered a new phase focused on building partnerships with businesses and demonstrating utility to users.

This is not the first time Tools for Humanity has faced scrutiny over its international operations. In 2022, the company told MIT Technology Review that it launched an investigation after the magazine's reporting showed that the company's contractor in Indonesia had made payments to village officials, a potential violation of the country's anti-corruption and anti-bribery laws.

Sam Altman did not respond to emailed requests for comment from Business Insider regarding the investigations.