In the fast-paced world of tech startups, a great idea can quickly lead to a billion-dollar valuation. But what happens when that idea—and the company behind it—is built on a foundation of lies? That’s the story of IRL, a social media app that once promised to connect people with real-life events, only to see its founder charged with a massive fraud.

IRL social media app founder faces fraud charges

IRL, which stood for “In Real Life,” was a social app that gained serious buzz for helping users organize offline activities. It seemed to have everything: a clear mission and a valuation of $1 billion. It also achieved backing from major investors like Peter Thiel’s Founders Fund. The app claimed to have an impressive 20 million active users, a metric that was key to securing a massive $170 million in funding in 2021.

But according to the Department of Justice, those numbers were a complete fabrication. Prosecutors have charged the app’s founder, Abraham Shafi, with defrauding investors by allegedly spending millions on “incentive advertising” to boost app installs. The problem? Shafi is accused of telling investors that the company spent “very little” on acquiring new users. Then, he allegedly hid the expenses by invoicing them to another firm.

95% of the IRL’s user base were just bots, the lawsuit claims

As it turned out, the company’s internal investigations later revealed a shocking truth. Apparently, 95% of IRL’s claimed users were not real people at all, but automated bots. The app, which once looked like a rising star in the social media space, was shut down in June 2023.

The allegations don’t stop there. Shafi is also accused of using the millions he raised from investors for personal gain. This reportedly included luxury hotel stays, high-end clothing, and covering “hundreds of thousands of dollars” for his wedding. This also includes airfare and hotel rooms for guests. The pattern of misusing funds is a recurring theme in other startup fraud cases.

IRL founder faces up to 20 years in prison

For now, Shafi faces serious charges. The list includes wire fraud, securities fraud, and obstruction. He could face up to 20 years in prison for each count. This case is a new example of how in the current tech landscape, where investors are constantly looking for the next “unicorn” startup, they can be fooled by fabricated metrics and a compelling, but ultimately false, story.
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Source: ndroidheadlines.com