Whether or not that's a "false" sense of privacy depends on your threat model.
Is your primary threat "What if someone hacks the communication server and leaks our conversations?" (This is something I worry about a lot.)
Is your primary threat "What if someone in our chat is a spy and we're planning crimes?" (This is something I don't worry about, but others might.)
In the first case, E2EE for up to 1000 participants in a group still makes sense.
In the second case, every additional participant is additional liability of government subversion.
Whether or not that's a "false" sense of privacy depends on your threat model.
Is your primary threat "What if someone hacks the communication server and leaks our conversations?" (This is something I worry about a lot.)
Is your primary threat "What if someone in our chat is a spy and we're planning crimes?" (This is something I don't worry about, but others might.)
In the first case, E2EE for up to 1000 participants in a group still makes sense.
In the second case, every additional participant is additional liability of government subversion.