Cryptocurrency

DJ 3LAU causes a stir after opting out of Friend.tech over regulatory risks

Photo of admin admin Send an email
0 4 2 minutes read

[ad_1]

Popular DJ and crypto investor 3LAU (Justin Blau) has caused a stir in the crypto community after suddenly opting out of decentralized social media platform Friend.tech. Explaining the decision, the DJ highlighted concerns over the regulatory risks that the platform may pose.

In a Sept. 15 X (Twitter) thread, 3LAU revealed that he stepped away from Friend.tech after “understanding more of the risks.”

“I think it’s an awesome product, but a bit too risky for me (unfortunately). I will be donating the 8-ish ETH to a music-specific charity that I’m passionate about called the Paid In Full Foundation.”

3LAU added that his main concern was around the automated market maker (AMM) that enables the trading of user keys (formerly know as shares) on the platform.

He suggested that such a feature on a social media platform sits in a regulatory gray area that could cause issues for users down the track.

“I don’t think the risks are *high* but I certainly have a responsibility to not engage in less-clear regulatory space[s],” he said, adding that: “Everything there is probably fine minus the AMM mechanic, which holds more risk, and I don’t want my brand to have an AMM associated with it, in this way.”

The move caused a significant reaction on X, with the 3LAU hashtag fielding a long list of tweets from people adding their takes to the situation by either showing support or criticizing the DJ.

Looking at the comments responding to his post, there were some people accusing him of dumping his shares on his followers, or using them as “exit liquidity.” However, 3LAU has since stated that he will be reimbursing anyone that bought his keys.

Friend.tech was launched in mid-August and the platform enables users to tokenize their social presence by buying keys from other users, or selling their own.

Related: Stoner Cats NFTs are ‘fan crowdfunding,’ not securities — SEC’s Peirce, Uyeda

Given that the keys can financially impact users as they cost money and they can fluctuate in value in response to a myriad of factors, the move from 3LAU highlights a challenging situation for those who no longer wish to use this type of social media platform.

In a follow up post, 3LAU clarified how he will compensate impacted key holders after noting that there had been “too much drama” surrounding his initial announcement.

“Making a split contract to return all of this ETH to 3LAU Friend.tech key holders pro-rata at the block at which I sold the first key. Still donating the full value of all my keys to charity. We cool now? Will follow up w/ transaction once we get it done.”

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in