Is Friend.tech, the crypto social media app, a scam?

Remember when we were inundated with crypto commercials starring Matt Damon, major sports league sponsorships, and drawings of apes? For those in the mainstream, cryptocurrency seems pretty much dead. However, the crypto community is still very much alive online. Investors, speculators, and scammers have been holding out during this long bear market, hoping that the next big crypto project will come along and turn their dimes back into dollars.

Many think they’ve found that very project in Friend.tech, which has gone viral in the crypto community over the past few days. A leaked database shows that more than 101,000 users have signed up since the invite-only beta version of the app launched on Aug. 10. 

And, of course, because this is crypto, making money is the factor here — and Friend.tech is already pulling in millions. According to CoinDesk, over the past 24 hours alone, Friend.tech has seen more than $1.04 million in transaction fees, generating just over $709,000 in revenue. Since it launched less than two weeks ago, Friend.tech has made around $25 million.

So, what is Friend.tech?

Simply put, Friend.tech is a mobile-based social media platform with a cryptocurrency twist. The app markets itself as “the marketplace for your friends” on its website. Much like other, non-crypto social media platforms that are in beta — like BlueSky — Friend.tech requires users to have an invite code from other users in order to sign up.

Friend.tech basically provides each user with their own Telegram-like chat group. In order for others to enter a user’s private group chat, they need to buy shares in that user. If and when they decide to leave that group chat, they can sell those shares to other users. 

Basically, Friend.tech is streamlining the old process in which Twitter influencers would hawk their own personal memecoins to their followers by attaching it directly to their identity and providing a premium feature, in this case, access to a private chat channel. It has all the other classic schemes usually connected to crypto projects as well, such as a fee-sharing mechanism and airdrops to reward users.

So far, some crypto influencers have publicized that they’ve earned dozens in ether. One ether is worth approximately $1,670 as of the publication of this article.

What are some of the issues?

This is a crypto project, so know that at the heart of this is a product that encourages highly-volatile speculation. Furthermore, while some will certainly make money off this, like most products in the crypto space, it’s unlikely to be those outside of the tightly-knit crypto-influencer circles.

There are some other causes for concern that some critics have pointed out as well.

The Friend.tech app requires users to link their Ethereum wallet with their account on X, the platform formerly known as Twitter. This created two issues. For one, some users realized that this gave the Friend.tech account certain permissions to their X account — like the ability to post and retweet on their behalf. The second issue is that, when the Friend.tech database was leaked, its contents publicly linked an X account to the crypto wallet it signed up with, something that the user may not have made public before.

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Friend.tech has been described as a decentralized social Web3 app and, with all those buzzwords lumped in together, one can be sure there’s a lot of inorganic hype behind this one as well. Like with the vast majority of these crypto projects, there’s likely behind-the-scenes coordination with various big names in the space on what to buy and when to sell, which gives them quite an advantage over the average user.

Is this a scam?

Well, again, this is a crypto project. In the opinion of many critics who have covered the industry, the entire crypto space is a scam.

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Scammers have already descended on Friend.tech after seeing how quickly it has blown up. Multiple phishing campaigns have already spread, attempting to trick users into signing up for a fake airdrop scheme which would then effectively drain their crypto wallets.

And then there’s the issue of who is behind Friend.tech. The team is entirely anonymous — as in, the actual identity of who’s running the app is unknown. It’s probably a good idea to know who, exactly, is behind a project if one is to invest a significant sum of money into it. 

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However, some within the crypto community have already looked into the history of the known online pseudonyms behind Friend.tech and there are already red flags. Members of the team behind Friend.tech were allegedly also behind a project called Kosetto, which sold wearable NFT stickers. Kosetto was hyped in a similar fashion towards the end of 2022, encouraging users to spam their referral codes on social media in order to win NFTs and invest in their much larger idea to come in the future. Then, suddenly, in early 2023, the project was abandoned, without notice to users who had invested. Kosetto’s social media accounts haven’t been updated since January.

However, unlike when they were working on Kosetto, the team from Friend.tech appears to have received some financial backing for their latest project. Friend.tech has received a round of seed funding from the crypto VC firm Paradigm, something that might ease the minds of users investing in the social media app.

Who else has Paradigm invested in? FTX, the failed crypto exchange founded by Sam Bankman-Fried who currently sits in jail while he awaits trial for multiple charges of wire fraud, securities fraud, and money laundering. The crypto-centric VC fund invested $278 million in the exchange, which it later told investors was now worthless.

Topics
Social Media
Cryptocurrency