SoftBank sues social app IRL for fraud, seeks $150 million in damages
Japanese investment giant SoftBank is suing social app IRL for fraud related to fake user base and growth, asking $150 million in damages.
Japanese investment giant SoftBank is suing social app IRL for fraud related to fake user base and growth, asking $150 million in damages.
In May 2021, SoftBank paid $150 million to purchase IRL shares based on IRL's valuation at $1 billion. In its lawsuit, SoftBank said that IRL CEO Abraham Shafi had claimed that his mobile app had been downloaded by 25 per cent of US teens under 18 years old and IRL had 12 million monthly active users, growing at a “meteoric” 400 per cent year-over-year rate.
Additionally, IRL reported strong user engagement and retention metrics, which showed that nearly 30 per cent of its MAUs were using the platform on a daily basis.
However, these metrics were accurate, according to SoftBank.According to the lawsuit, IRL spent tens of thousands of dollars on proxy services to fraudulently inflate IRL's user data with bots.
“Upon information and belief, IRL did not actually have 12 million MAUs during the period when SoftBank conducted diligence for its investment in April and May of 2021. Nor had 25 per cent of teenagers under 18 years old downloaded IRL's mobile app,” the lawsuit claimed.
To the contrary, “the social app spent substantially more than $50,000 per month to acquire each actual, monetisable user,” and despite explicitly telling SoftBank that “no (IRL) Active User was generated by any click farm or similar service, bot, automated programme or similar device,” on information and belief the vast majority of IRL supposed “active users actually were bots”.
IRL is also being probed by the YS Securities and Exchange Commission (SEC) to determine whether the app violated security laws by misleading investors.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
If you make RDs of Rs 5,000, Rs 10,000, Rs 15,000, and Rs 20,000 in post office, what will be your maturity amount?
Special Live Trading Session on Saturday: Know why BSE, NSE will remain open on May 18; check timings
RCB vs CSK IPL 2024 Ticket Booking Online: Where and how to buy RCB vs CSK tickets online - Check IPL Match 68 ticket price, other details
Women loco pilots speak about their struggle; many men have to be informed even for 'washroom break' in a moving train
Bandhan Bank Q4 FY24 Results Preview: PAT, interest income likely to grow in almost double digits; asset quality may improve
01:20 PM IST