IRL Founders Accuse Investors of Sabotaging Startup with False Bot Allegations
The founders of IRL, Abraham Shafi and Genrikh Khachatryan, have filed a lawsuit against their investors, alleging they intentionally derailed the social event platform by fabricating claims that 95% of its users were fake.
The Rise and Fall of a Gen Z Social Platform
At its peak, IRL positioned itself as a next-generation event-organizing app, capitalizing on Gen Z’s declining engagement with Facebook. The company raised over $200 million from prominent investors, including SoftBank, reaching a $1.17 billion valuation during its 2021 Series C round.
Key Allegations in the Lawsuit
- Investors named: Chi-Hua Chien (Goodwater Capital), Serena Dayal (SoftBank), and Mike Maples (Floodgate)
- Founders’ claim: Investors used the “95% fake users” figure as pretext to shut down IRL and reclaim remaining funds ($40 million in cash reserves)
- Investigation findings: Board-commissioned forensic report cited suspicious activity, including:
- Millions of duplicate-named private groups
- Irregular signups from Hotmail, Yahoo, and burner emails
- Proxy server IP addresses and cycling device types
The Board’s Counterargument
In an official statement, IRL’s remaining board members disputed the founders’ claims:
“After Shafi’s suspension, we observed an overnight drop in daily active users unrelated to technical issues. Our investigation revealed clear evidence of inauthentic user behavior and Shafi’s misuse of company funds.”
Regulatory Scrutiny and Industry Context
The SEC has been investigating whether IRL violated securities laws by potentially misleading investors. This case joins other high-profile startup controversies:
- Bolt: Faced SEC probe over financial misrepresentation allegations (later cleared)
- Frank: SEC charged founder with fabricating millions of users to secure $175M JPMorgan acquisition
Legal Perspectives
Stephen Shackelford of Susman Godfrey, representing the founders, stated:
“This represents every founder’s worst nightmare. Rather than supporting IRL, defendants destroyed the company and tarnished reputations. The 95% bot claim was fabricated to serve as both narrative and scapegoat.”
Ongoing Developments
As the legal battle unfolds, the case highlights critical questions about:
- Investor-founder relationships during crises
- Verification of user metrics in social platforms
- Accountability in high-stakes startup environments
For full legal documents, see the IRL lawsuit filing on Scribd.
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