Friend.Tech Renames ‘Shares’ To ‘Keys’ During Regulatory Uncertainty Surrounding Crypto

Friend.tech, the crypto industry’s trendiest new ‘marketplace for friends,’ has taken off on Coinbase’s
COIN
layer two Base protocol, surpassing over $35 million in purchased ‘shares’ just a little more than a week after launching earlier in August. Now it decided to rename its highlight feature ‘shares’ to ‘keys’ as users poke fun at the platform for allegedly offering unregistered securities. Even Coinbase CEO Brian Armstrong has acknowledged the shocking tidal wave of users flocking to the high-risk project.

Stepping back, Friend.tech enables users to purchase ‘keys’ (recently renamed ‘shares’) of fellow user profiles via Ethereum
ETH
. The main utility is the ability to message the user whose keys you bought. Shares/keys generate profit by earning trading fees. The developers behind Friend.tech previously made the controversial yet lucrative crypto project Stealcam. The pseudonymous developers haven’t launched any official startup name, but did raise funds from the crypto venture capital firm Paradigm.

If you’ve been around long enough to have witnessed the 2017 initial coin offering craze, Friend.tech should raise plenty of red flags. The project has no white paper, no pricing plans, no roadmap, and does not even have a privacy policy.

In an X post from the project’s official account, the Friend.tech developer team stated that the term keys “better illustrates their purpose as in-app items used to unlock your friends’ chatrooms.”

But users aren’t having it, and for good reason.

U.S. regulators have had an eye out for crypto this year. The Securities and Exchange Commission sued Celsius Network Ltd. and its former executives for securities fraud and market manipulation. Meanwhile, New York court found Ripple to be a security but also not be a security. Meanwhile, Gary Gensler, head of the Securities and Exchange Commission, has made headlines by deeming everything but bitcoin a security.

If we’ve learned anything from the recent Ripple ruling, it’s that the need to register securities in public offerings was tied to the information that is openly available.

This landmark ruling is precisely what could break Friend.tech’s neck as users scramble to evaluate the network’s pricing model. So far, users speculate that Friend.tech follows a quadratic model, which has neither been confirmed nor denied by its architects. Meanwhile, no one who has signed up to the platform, which requires the connecting of a Twitter account as well as an ETH wallet, has any idea how their data is being used.

While it is hard to imagine that the SEC would turn a blind eye towards a project that has already made some users well over $100.000 in revenue, it may end up offering an important learning for players in the cryptoverse: don’t use your friends as exit liquidity.