Founder of IRL social media app charged with defrauding investors

The founder of the IRL social media application has been indicted for allegedly defrauding investors out of $170 million during a 2021 funding round, as announced by the Department of Justice on Wednesday. Abraham Shafi, 38, from Hawaii, faces charges including wire fraud, securities fraud, and obstruction following a federal grand jury's investigation in the Northern District of California. Shafi served as the CEO of Get Together, the parent company behind IRL, which achieved a valuation of $1 billion after its Series C funding round in 2021. The platform, which ceased operations in June 2023, allowed users to organize events and engage in offline activities, gaining popularity as one of Apple's top social apps in 2018. According to the DOJ, Shafi allegedly misled investors by claiming the company spent very little on user acquisition, while he reportedly invested millions in advertising to increase app installs prior to the funding round. He is accused of disguising these expenses by routing them through another firm. The indictment further claims that Shafi and his fiancée misappropriated investor funds for extravagant personal expenses, including luxury accommodations, high-end clothing, art classes, and even costs associated with their wedding, which included airfare and hotel stays for guests. In 2018, Shafi had expressed to CNBC that investors were drawn to the company's potential to rival giants like Facebook and Snapchat. Notable investors in IRL included Peter Thiel's Founders Fund and the venture capital firm Floodgate, while Shafi's co-founders included industry veterans such as Scott Banister, an early investor in Facebook and the first board member of PayPal. Currently, Shafi stands alone in the indictment, facing a potential maximum sentence of 20 years for each count against him. This indictment follows previous charges from the Securities and Exchange Commission related to the same fraudulent actions, with SEC officials highlighting Shafi's exploitation of investor interests in the pre-IPO tech sector.