It's a logical extension of the ponzi scheme that exists in the venture capital/startup world in tech. The fact that so many startups fail is irrelevant to the early investors in these companies, as long as you get in at or before Series A you have a good exit 90% of the time. Just force some artificial growth and wait for the next round of investors.

Everyone who comes later... not so much. Very few good outcomes. So they're now just adding some more levels to the pyramid to try and push the scam down the line to the IPO market.

It should be illegal, and would be if we had a functional SEC instead of what is effectively an empty building.