Technical debt refers to the issues or deficiencies within the code that arise from taking short-term solutions or shortcuts. These can affect the integrity and quality of the system over time if not addressed. As a result, the team's velocity may appear artificially inflated, leading to false assumptions about the actual state of the product. While the product might seem complete and functional on the surface, underlying problems can compromise its long-term sustainability and performance. Therefore, it is true that technical debt can lead to false assumptions about the current state of the system and the increment reviewed at the end of the sprint.