Abraham Shafi, founder and CEO of Get Together, has been charged with defrauding investors of US$170 million during the 2021 funding round for the IRL social media app, according to the US Department of Justice.

Get Together operated IRL, a platform for organizing events and offline activities that shut down in June 2023.

A federal grand jury indicted Shafi in Oakland, California, on counts of wire fraud, securities fraud, and obstruction.

Prosecutors allege Shafi spent millions on incentive ad to increase IRL’s installs before the series C round, while telling investors the company spent “very little” to acquire new users and then hid the expenses by invoicing them to another firm.

Shafi is also accused of using investor funds for personal luxury expenses, including hotel stays, clothing, wedding costs, home furnishing retailers, art classes, and paying for wedding guests’ airfare and luxury hotels.

He faces up to 20 years in prison for each charge.

The Securities and Exchange Commission filed a related civil lawsuit last year.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Fake user metrics can persist through multiple funding rounds despite investor scrutiny

IRL’s collapse reveals how fabricated growth metrics can fool sophisticated investors for extended periods.

The company successfully raised over $200 million and achieved a $1.2 billion valuation while claiming 20 million active users, but internal investigations later revealed that 95% were automated bots2.

The deception persisted through multiple funding rounds, including a Series C led by SoftBank, demonstrating that even well-resourced investors can miss fundamental red flags in user verification.

This case highlights a vulnerability in social media and app-based startups where user engagement metrics are central to valuations but relatively easy to manipulate through automated accounts.

2️⃣ Personal misconduct often accompanies business fraud in startup schemes

Abraham Shafi’s charges illustrate how startup fraud typically involves both misleading investors about business performance and misappropriating funds for personal use.