The app was hyped as an event organizing alternative for Gen Z.

In real life, 95 percent of unicorn social messaging app IRL’s 20 million users didn’t actually exist, and the company, which raised $200 million in venture capital, has been shut down after its CEO was the subject of an internal misconduct investigation.

IRL’s board of directors found that 95 percent of the app’s reported 20 million users were “automated or from bots,” The Information reported.

The app was supposed to attract Gen Z, who are using Facebook less and less, Tech Crunch reported. However, after SoftBank led a $170 million Series C round at a $1.17 billion valuation, internal troubles at IRL came into the spotlight.

In 2022, the IRL CEO said repeatedly that the app had 20 million monthly active users who chatted about shared interests and planned real-world events together. 

After more than tripling its headcount in 2021, the 7-year-old company laid off about a quarter of its 100 staffers in 2022. Around the same time as the layoffs, IRL employees started raising concerns about the accuracy of the claim that the app had 20 million monthly active users. Later in 2022, the Securities and Exchange Commission started investigating whether IRL had violated securities laws.

In March 2023, a former employee accused IRL of manufacturing fake users using bots to inflate its user count and of retaliating against him and other employees expressing doubts about IRL’s user numbers, The Information reported. The former employee said IRL fired him two months after he told executives about a string of events that led him to believe a majority of IRL’s users were bots.

The IRL board suspended the founder and CEO, Abraham Shafi, for alleged misconduct and a spokesperson said the company will shut down and return capital to shareholders.

“Based on these findings, a majority of shareholders concluded that the company’s going forward prospects are unsustainable,” said spokesman Elliot Sloane.

Other spectacular startup frauds include medical startup Theranos, and financial aid startup Frank.

Theranos CEO Elizabeth Holmes promised to revolutionize blood tests. Instead, customers received wrong diagnoses and investors lost their money. Holmes is serving an 11-year prison sentence for bilking investors out of hundreds of millions of dollars and lying about her biotech company’s blood-testing technology.

Former Frank CEO Charlie Javice was charged with defrauding JPMorgan Chase, which bought her startup for $175 million in 2021. Javice was accused by the Department of Justice of manufacturing fake users — “falsely and dramatically inflating” the number of clients her startup served to “fraudulently induce” JPMorgan Chase into buying the company.