What it was. A group-messaging and events app founded by Abraham Shafi, which reached a $1.17B valuation in a SoftBank-led $170M Series C in June 2021.
What actually happened. The SEC alleges that Shafi misrepresented that IRL had "organically attracted the vast majority of its purported 12 million users," when in fact the company spent millions of dollars on paid advertising to acquire them, and concealed those marketing expenses by understating them in offering documents and routing payments through third parties. The complaint further alleges that Shafi and his fiancée Barbara Woortmann charged hundreds of thousands of dollars of personal expenses — clothing, home furnishings, travel — to company credit cards (SEC Litigation Release No. 26066, SEC v. Shafi and Woortmann, No. 4:24-cv-04636 (N.D. Cal., filed July 31, 2024)) [Verified — federal court filing; allegations, and Shafi has contested them].
The board conducted an internal investigation in 2023, concluded a large share of users were automated or non-genuine, removed Shafi, and shut the company down. In August 2025 federal prosecutors also charged Shafi criminally (CNBC, August 2025).
Lesson for founders and investors both. "Organic growth" is the single most manipulable metric in consumer software, and it is the one investors most want to hear. The diligence failure here was not exotic: reconciling claimed organic growth against actual marketing spend is a bank-statement exercise. In a hot market with a competitive round, nobody did it.
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