It would still serve its purpose even if you spoofed your location to be somewhere nearby or elsewhere. Nobody needs to be able to figure out exactly where specific users are/live/work via the platform.
Seeing that someone is 100 ft away is a common start of a conversation. Maybe they live in the same apartment, at a local coffee shop, work in the same building. Which leads to... well...
That doesn't excuse the privacy issues though.
The types of people that open with "I'm 50m away from you" are super freaking creepy.