Popular DJ and cryptocurrency investor 3LAU (Justin Blau) has caused a stir in the cryptocurrency community by suddenly opting out of decentralized social media platform Friend.tech. In explaining the decision, DJ highlighted concerns about the regulatory risks the platform could pose.
In a September 15 (Twitter) post, 3LAU revealed that he left Friend.tech after “learning more about the risks.”
“I think this is a great product, but too risky for me (unfortunately). I will be donating 8 or so ETH to a music charity I am passionate about called the Fully Paid Fund meeting.”
Because people will ask…
Just quit https://t.co/ekERrR7Af3 after learning more about the risks.
I think it’s a great product, but it’s too risky for me (unfortunately).
I will be donating 8 ETH to a music charity that I am passionate about called…
— 3LAU (@3LAU) September 15, 2023
3LAU added that his main concern is automated market makers (AMMs) that enable trading of user keys (formerly known as stocks) on the platform.
He said such features on social media platforms were in a regulatory gray area and could cause problems for users.
“I don’t think the risk is high, but I certainly have a responsibility not to get involved in less clear-cut regulatory areas[s],” he said, adding: “Everything may be fine except for the AMM mechanism, which brings greater risks and I don’t want my brand to be associated with AMM in this way. “
The move sparked a backlash on X, with the 3LAU tag sparking a tirade. list People expressed their views on the situation by expressing support or criticizing the DJ.
Looking at the comments on his posts, some have accused him of dumping shares to his followers or using them as “exit liquidity.” However, 3LAU has since said it would compensate anyone who purchased its keys.
Translation: You pour into your bearer pic.twitter.com/XAJDMYznlG
— Tom (@thomasjeans) September 15, 2023
Launched in mid-August, Friend.tech is a platform that enables users to mark their social presence by buying keys from other users or selling their own.
related: Stoner Cats NFT is “fan crowdfunding,” not a security – SEC’s Peirce, Uyeda
Given that keys can have a financial impact on users, as they cost money and their value can fluctuate based on a number of factors, 3LAU’s move highlights the potential for those who no longer wish to use such social media platforms about the challenges faced.
In a follow-up post, 3LAU noted that there was “too much drama” surrounding his initial statement, before clarifying how he would compensate affected keyholders.
“Sign up to a split contract that will give all of this ETH back to 3LAU Friend.tech key holders on a pro-rata basis in the block where I sold the first key. Still donating the full value of all my keys to charity. Let’s chill now Already? We will follow up on the deal once we complete it.”
Just saw your post.
one of my co-founders @Marty Devin There are similar concerns.
The way you exit is solid. In fact, I sold everything but my own keys a few weeks ago when they were about to go anti-competitive. https://t.co/bD6UAoLiFm
— Flu | wafflesbrah.eth ⚡️ (@DefinalFantasy) September 15, 2023
Magazine: How to Protect Your Cryptocurrency in Volatile Markets – Bitcoin OGs and Experts Involved