That's just not true. Simple as that, maybe a few of the people you know just happened to be placed in gold 4 but most people who used to deserve diamond 5(so they didn't have super low MMR ) are now in plat 3-1.
Hmm weird cuz I had a guy on my buddylist with really good elo being D5, got put in G4. ^^ Are you sure this softreset takes mmr into consideration or just tier/div?
I'm pretty fucking sure. I was d1 4 LP, went 5-5 and got placed into plat 1(the highest you can get). Another acc was plat 1, went 7-3 and got placed into plat 3.
So yeah, pretty sure your buddy just had bad MMR.
The answers you're looking for are likely contained in this post:
Best of luck on the Rift mate!