SocialFi, a prominent player in the world of cryptocurrency, has recently drawn attention due to the surge in transaction volumes and activities on its platform. The transaction volume surpassing $10 million has raised suspicions within the industry. Industry journalist Colin Wu has highlighted these concerns.
Controversy Arises as Volume Increases
Over the weekend, the withdrawal of over 5,000 Ethereum from the platform caught attention. Colin Wu warned that this development could be an exit scam. Particularly, the withdrawal of such a large amount of ETH was last seen on October 24. Back then, 4,380 Ethereum was withdrawn from the platform.
Following these developments, there was also a 21% decline in the total locked value (TVL) on Friend.tech. The total locked value dropped to 17,100 Ethereum, equivalent to $34,026,000. One notable aspect of this figure is that it represents the lowest TVL since mid-September. The figure stood at $50 million at the beginning of October, indicating a 34% decrease since then.
Stagnant Growth in New User Numbers
One significant figure on the platform is the lack of growth in new user numbers since the end of October. According to Dune Analytics data, the total number of users remained at 839,233. This poses a negative situation for the platform as malicious actors target users through phishing and SIM swapping attacks. As a result, the platform is plagued with scammers.
The team also made a specific mention of these fraudulent activities in their statement. They stated that they identified and removed approximately 600,000 bot accounts. However, there seems to be an issue as real individuals were also found among the removed accounts.
User Lockouts
The problem has also permeated the cryptocurrency world, with many influencers stating that they can no longer access the platform. Some have even lost money, like user X, known as SalsaTekila, who revealed losing more than 10 Ethereum. They also expressed regret for joining the platform, describing it as incompetent.
Analyst Alex Krüger, who had his account locked, criticized the team for not assisting him and made the following statement:
These people are complete scum. The founders have a fiduciary duty to their depositors.
At this point, the negative situation surrounding the platform has also led to growing dissatisfaction. If users start withdrawing their assets, we will witness a diminishing excitement around Friend.tech in the coming days. That is, of course, if they are able to withdraw their funds.
