In a statement, Interior Cabinet Secretary (CS) Kithure Kindiki said that the government is concerned about the World Coin project that has registered many Kenyans.
He said the suspension will remain in effect until relevant agencies certify the absence of any security risks.
"Relevant security, financial services and data protection agencies have commenced inquiries and investigations to establish the authenticity and legality of the aforesaid activities, the safety and protection of the data being harvested, and how the harvesters intend to use the data," read part of the statement.
"Further, it will be critical that assurances of public safety and the integrity of the financial transactions involving such a large number of citizens be satisfactorily provided upfront."
Additionally, he said that if anybody is found further aiding or engaging in the activities will be dealt with as prescribed by law.
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This comes a day after police turned away many Kenyans lined up at the Kenyatta International Convention Center(KICC) to get scanned for registration, citing security concerns.
However, the World Coin team was advised to look for a bigger venue like the Nyayo and Kasarani Stadiums for the activities.
Worldcoin, owned by American Artificial Intelligence (AI), is registered by having an individual scan their iris and receive 25 free WLD. The tokens are currently valued at KEs 7,786.
Data Commissioner Immaculate Kassait said the commission is assessing Worldcoin's practices to ensure compliance with the law.
The project by OpenAI CEO Sam Altman has been heavily criticised over privacy concerns. Still, the company's website says the project is "completely private" and that data is deleted or a user can opt to have it stored in encrypted form.