Speaking to the Daily Mail, a source said Essena had been dating teen Disney heartthrob Blake Michael and after the pair broke up she became disillusioned with the life of a celebrity.
Earlier this week Essena deleted all of the captions on her social media posts and replaced them with 'real life' captions, explaining the hard work and unhappiness that went in to each photo.
In a video posted online, the social media blogger broke down in tears and cried about the support she had received from fans, who she then urged to contribute moeny to her new website, as she can't afford her rent or lifestyle anymore.
During the video, Essena claimed she had been in talks with sponsors in LA but then realised that this was not the path she wanted her life to go down.
"I was dating a guy that was way more famous than me - 'famous' - way more successful, had an amazing car, beautiful beyond words. And he was f***ing depressed!" she said
"I was like, 'what? You have everything!'."
Now friends say Essena had talked about moving to LA and was dating Blake Michael, who is best known for his role as Charlie Delgado in the Disney Channel film Lemonade Mouth, however that all came to a halt after the pair broke up.
"The reason she is so upset and so down is because of the break up with this guy... what she is saying is fake," friends told the Daily Mail.
A spokeswoman for O'Neill told Daily Mail Australia via email: "Essena is not doing any more press at this stage and does not want to comment any further about her decision to quit social media.
"Instead she is focusing her time and efforts into her website, "Let's Be Game Changers" and also writing her first book."