Overview

• A federal grand jury in the Northern District of California on Aug. 27 charged Shafi with wire fraud, securities fraud, and obstruction, following an FBI investigation led by the U.S. Attorney’s Office.
• Court filings allege he told investors IRL spent about $50,000 a month on advertising and that signups were not incentivized while he actually spent millions on incentive ads, including ordering a short “big burst” to drive installs before the Series C.
• Prosecutors say he concealed the true spending by routing invoices through a third party and directing false internal invoices that labeled the costs as infrastructure expenses.
• The indictment alleges investor money was used for personal purchases such as luxury hotel stays, clothing, home furnishings, art classes, and hundreds of thousands of dollars for wedding-related costs.
• If convicted, he faces up to 20 years in prison on each count, and the case follows earlier SEC civil charges and IRL’s shutdown in 2023 after its $170 million Series C at a valuation exceeding $1 billion.