Authorities charged the ex-CEO of a former unicorn, buzzy social media startup IRL (which stands for “in real life”) with fraud and obstruction after an investigation showed the executive allegedly misled investors and then trashed files by restoring his cell phone to a previously saved backup that deleted relevant records.
According to the Department of Justice, Abraham Shafi, 38, who lives in Hawaii, allegedly told venture capital investors the growth of his event-based social media app, IRL, was “organic” from people inviting their friends to download it. Shafi claimed the company only spent $50,000 a month on marketing and PR to acquire new users, court records show. In reality, IRL spent about $200,000 per month on advertisements to help inflate the number of users and hid that data from potential investors, authorities claim. In 2021, IRL raised $170 million in a Series C funding led by SoftBank Vision Fund 2, solidifying its coveted status as a unicorn with a $1.17 billion valuation and landing it among the top 10 most downloaded social media apps on Apple. Now, Shafi faces obstruction of justice, securities fraud, and wire fraud felony charges, along with civil charges from the Securities & Exchange Commission.
