Popular DJ and crypto investor Justin Blau, better known by his stage name 3LAU, has caused a stir in the crypto community after suddenly opting out of the 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 ( formerly 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.”
Because people will ask…
Just off-boarded https://t.co/ekERrR7Af3 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…
— 3LAU (@3LAU) September 15, 2023
3LAU added that his main concern was around the automated market maker (AMM) that enables the trading of user keys (formerly known 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 who bought his keys.
translation: you dumped on your holders pic.twitter.com/XAJDMYznlG
— Tom (@thomasjeans) September 15, 2023
Friend.tech, which was launched in mid-August, 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 can fluctuate in value in response to many 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 would 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.”
Just saw your post.
One of my cofounders @MartyDevin has similar concerns.
And the way you exited was solid. I actually sold everything other than my own keys a couple 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 crypto in a volatile market — Bitcoin OGs and experts weigh in
