no, that's not what happened. the bike does not need the app or the website, at least mine never did. i've had it for close to 5 years and never use the website (not sure what it does other than initial registration?) and only use the app when i use the kicklock because i forgot the button sequence to unlock it otherwise. the app still works fine and has worked fine through the bankruptcy etc. there was also a third party app, not sure if it still works but i know some of the features of it (like changing the speed limit lol) were cut off by later bike firmwares. i haven't touched mine in years.
that said - YES - the founders s*it the bed and a decent number of people got screwed out of deposits. it can be hard to get parts although there are SO many of these bikes out there that it's not all that different from a less proprietary bike with uncommon parts from shimano or sram or microshift after 5-10 years.
there were a number of things about their model, initially, that were REALLY GREAT. the service at our local vanmoof shop was top notch. appointments by mobile app, specific drop off times, fast service, all parts on hand, etc. the built in kick lock is a great feature. the built in lighting is sleek and good enough for city use. the IGH with automatic shifting makes start and stop in the city seamless. the "boost' button is a clever workaround the throttle issue - it's not a throttle because it only works when you're already pedaling. it's basically the equivalent of switching a specialized bike from eco to turbo momentarily, which nobody would accuse of being against the class rules. the displays built into the top tube or now the bars are super sleek compared to the usual barely-masked-third-party screens with a bunch of wires going out of them. compare the number of cables at the front end of a VM to just about any other consumer level e-bike. it's night and day! and the price point was pretty good for all that with an IGH.
however, they made SERIOUS engineering mistakes in the X3/S3 generation that basically doomed them. they had to replace major components of a significant portion of the bikes multiple times (mine included) due to either design or engineering failures in the electronic shifter and possibly other components. doing that under warranty with expensive labor (their biggest service centers were in NYC and SF) at the same time as doing the engineering and tooling for the next generation of bikes. this led to the usual over-leveraging, debt, and the vicious spiral of an overly ambitious startup. many customers got hosed.
i would never buy one again - but if someone else designed and sold a similar bike, i totally would. they're still the most common single type of ebike i see around here, and almost everyone still loves theirs.