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 people familiar with the probes. The company, which operates the Worldcoin cryptocurrency network, engaged two major law firms to examine the concerns and subsequently severed ties with a business partner in the region.

What Allegations Led to the Investigations?

Tools for Humanity hired law firm O'Melveny & Myers to examine concerns raised by a company employee about potential misuse of company funds. The investigation looked into several areas of financial concern at the startup.

• Personal Expenses: Allegations that personal expenses and corporate housing were charged on company credit cards without proper authorization or oversight.
• Employee Misclassification: Concerns that full-time employees were misclassified as contractors, potentially to lower the employees' tax burden and reduce company expenses.
• Token Manipulation: Allegations that senior company leaders approved six- and seven-figure payments to a foreign firm to artificially boost the value of the Worldcoin token, which could violate Securities and Exchange Commission (SEC) rules.

The company's auditing firm, BDO, also reviewed the financial concerns raised by the employee. Additionally, Tools for Humanity hired law firm Sidley Austin to investigate whether the company's dealings in Thailand violated the Foreign Corrupt Practices Act (FCPA), a federal law that prohibits companies from paying or promising bribes to foreign officials to obtain or retain business.

How Did Tools for Humanity Respond to the Findings?

As a result of the investigations, Tools for Humanity severed ties with a business partner in Thailand and strengthened its policies and controls. The company stated that it is not aware of any facts establishing a violation of the Foreign Corrupt Practices Act by the company or any of its employees.

"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," a Tools for Humanity spokesperson stated.

Tools for Humanity Spokesperson

The company also emphasized its commitment to ethical business practices. A spokesperson noted that Tools for Humanity "maintains robust policies and practices designed to support that commitment, we enforce them, and we strengthen them when we identify areas for improvement".

What Was the Thailand Business Partner Issue?

One of the investigations examined Tools for Humanity's rollout in Thailand 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 in December by the House Foreign Affairs Committee named Mauerberger on a list of foreign nationals who could be subject to sanctions for alleged involvement in transnational "pig butchering" scams.

Tools for Humanity stated 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.

How to Strengthen Corporate Oversight in Startup Operations

• Independent Legal Review: Engage external law firms to conduct independent investigations when concerns about financial irregularities or compliance violations are raised by employees or stakeholders.
• Enhanced Due Diligence: Implement robust vetting procedures for business partners and contractors, including background checks and verification of identities before entering into agreements.
• Internal Audit Coordination: Work with external auditing firms to review financial practices, employee classifications, and expense management to ensure compliance with tax and labor laws.

What Is the Broader Context for Tools for Humanity?

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 goal is to distinguish humans from artificial intelligence bots using iris scans performed by a device called the "Orb".

Valued at $2.5 billion in 2023, Tools for Humanity has raised hundreds of millions of dollars from major investors including Andreessen Horowitz, Bain Capital, and Khosla Ventures. However, the company has faced significant regulatory challenges and public scrutiny. The Worldcoin token has declined sharply in value, standing at around 61 cents as of the time of reporting, representing a 95 percent decline from its peak of $11.79 in March 2024.

Tools for Humanity has been barred, paused, or investigated in many countries, including Spain, India, and Indonesia, due to concerns about its iris-scanning technology and data collection practices. 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. Additionally, Thailand's Department of Special Investigation launched its own separate probe into the company's operations.

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

Sam Altman did not respond to requests for comment regarding the investigations. The findings from at least one of the law firm investigations were presented to the company's board, which includes Altman, Chief Executive Alex Blania, and Spencer Bogart, general partner at Blockchain Capital.