Two years ago, the Gen Z-messaging app IRL was flying high with a $1.2 billion valuation and a fresh $150 million from SoftBank and $20 million from other investors. Not long after, the company spiraled into a web of investigations, lawsuits, and ousted management. In June, IRL shut down—announcing that nearly all of its user base had been comprised of bots. 

But it’s hardly over yet. Yesterday, IRL cofounders Abraham Shafi and Genrikh Khachatryan and former president Krutal Desai filed a lawsuit against a handful of defendants, including IRL’s three investors and board members: SoftBank’s Serena Dayal, Floodgate’s Mike Maples, and Goodwater Capital’s Chi-Hua Chien. In the lawsuit, Shafi, Khachatryan, and Desai allege that the investors lied about the prevalence of bots so that they would not “be personally blamed for having run a billion-dollar company into the ground in a matter of weeks.”

A little history of how we got to this point…In Spring of last year, a report in The Information raised questions over whether IRL’s user growth was as impressive as its CEO, Abraham Shafi, had made it sound. Not long after that story was published, the SEC issued a subpoena to the company and later subpoenaed Shafi personally, according to legal filings from a separate lawsuit Shafi filed last month in an attempt to get reimbursement from his legal bills. Shafi ended up providing “two full days of testimony” to the SEC in May 2023, he said in the lawsuit, and Shafi said that he “assisted in preparing and reviewing numerous presentations” to the regulator. (An IRL spokesman said there were “ongoing government investigations.” An SEC spokesperson declined to comment.)

By April of this year, Shafi had stepped down as CEO. In August, SoftBank then sued CEO Shafi and five of his relatives for fraud, alleging that they had put on an “elaborate scheme to defraud investors” and had allegedly misled the investment firm and concealed relationships with “proxy services that helped deploy bots onto the platform to masquerade as IRL users.” (A representative for Abe Shafi said that he denies all the allegations in SoftBank’s complaint.)

Now Shafi and his peers are firing back. In the lawsuit filed yesterday, they assert that an independent technology consulting firm analysis, Google authentication data, and research from IRL’s investors during the due diligence process all debunked “bot-related allegations.” The plaintiffs also tried to discredit a report the investors had directed into the bot issue and argued that most of the platform’s users left IRL after alleged outages that took place after Shafi’s departure. 

In a statement to Fortune on behalf of IRL and its investors, a spokesman maintained the accuracy of the Board-led investigation and its findings that 95% of IRL’s active users “were in fact automated or from bots.” He said that, shortly after Shafi’s suspension, IRL experienced a “significant drop in daily active users virtually overnight” that was “not due to an outage.”

“Based on this as well as evidence of Shafi’s misappropriation of company funds and repeated interference with the investigation, the Board—after months of review—concluded that the Company’s going forward prospects were unsustainable,” the IRL spokesman said in a statement.

What a complete mess.

In other news…Yesterday Fortune tech editor Alexei Oreskovic wrote about a funding round for one of the more unusual health care ideas I’ve read about in a long time: $100 million for science fiction-esque medical pods powered by AI that would conduct heart and blood tests or look at the weird spot on your skin, all in an eight-foot-by-eight-foot cube. Read the story here.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

- Petvisor, an Orlando, Fla.-based veterinary and pet services business management and client engagement software platform, raised $100 million in funding. Apax Digital led the round and was joined by Frontier Growth, PeakScan Capital, and Petvisor’s management team.

- Cytovale, a San Francisco-based developer of early detection technologies for immune-mediated diseases, raised $84 million in Series C funding. Norwest Venture Partners led the round and was joined by Sands Capital and Global Health Investment Corporation.

- Element Energy, a Menlo Park, Calif.-based developer of advanced battery management technology for energy storage and EV applications, raised $73 million in Series B funding from Cohort Ventures, Mitsubishi Heavy Industries, Drive Catalyst, FM Capital, and others.

- NTx, a Rio Rancho, N.M.-based company building platforms for the sustainable and eco-friendly manufacturing of mRNA vaccines and protein therapeutics, raised $47.5 million in Series B funding. RA Capital Management led the round and was joined by others.

- VaultSpeed, a Leuven, Belgium-based platform that converts, cleans, and structures data, raised $15.9 million in Series A funding. Octopus Ventures led the round and was joined by Fortino Capital, PMV, and BNP Paribas Fortis Private Equity.

- Gravity, a New York City-based provider of electric vehicle chargers and other EV infrastructure, raised $13 million in seed funding. Google Ventures led the round and was joined by others. 

- Virdee, an Austin, Texas-based provider of guest experience and check-in automation technology, raised $12.4 million in Series A funding. Moneta Ventures led the round and was joined by Silverton Partners, Koch Real Estate Investments, Alumni Ventures, DJR Advisors, Capital Factory, and others.  

- Tenet, a New York City-based platform designed to provide better loan terms for electric vehicle customers, raised $10 million in Series A funding. Nyca Partners led the round and was joined by Assurant Ventures and Giant Ventures.

- CFX Labs, a Chicago, Ill.-based owner and operator of a nationwide payment network designed to reduce fraud, settlement times, and remittance costs, raised $9.5 million in seed funding from Shima Capital, Decasonic, Antalpha, CMT Digital, Corazon Capital, and others.

- Martian, a San Francisco-based large language model developer, raised $9 million in seed funding from NEA, Prosus Ventures, Carya Venture Partners, and General Catalyst. 

- TANDA, a Cupertino, Calif.-based platform where employees can communally dedicate portions of their paycheck to an emergency fund pool, raised $4.5 million in seed funding from Initialized Capital and Arc.

- Canopy, a Seattle, Wash.-based tk, raised $4 million in seed funding. Kindred Ventures led the round and was joined by Village Global.

- Rho Labs, a London, U.K,-based platform designed to facilitate transparent and secure on-chain trading of interest rate derivatives, raised $2.2 million in pre-seed funding. Speedinvest led the round and were joined by Keyrock, Re7 Capital, and others. 

PRIVATE EQUITY

- KKR took Chase Corporation, a Westwood, Mass.-based manufacturer of industrial coatings, tapes, adhesives, and sealants, private for $127.50 per share. 

- Caymus Equity Partners acquired Quality Environmental Services, a Beaverton, Mich.-based provider of asbestos abatement, mold remediation, lead paint abatement, and other environmental remediation services. Financial terms were not disclosed. 

- Data Clean, backed by Angeles Equity Partners, acquired Sealco, a Richardson, Texas-based provider of cleaning services for critical environments, like data centers. Financial terms were not disclosed.

- MCCi, backed by Century Park Capital Partners, acquired GovBuilt, a Manhattan, Kan.-based provider of government software for the permitting and licensing processes. Financial terms were not disclosed. 

- Right Time Group of Companies, backed by Gryphon Investors, acquired Breathe Clean Mini Split Heat Pump Cleaning, a Halifax, Nova Scotia-based provider of ductless heat pump cleaning services. Financial terms were not disclosed. 

- Sharpen Technologies, a portfolio company of TELEO Capital Management, acquired Plum Voice, a Boston, Mass.-based provider of AI-powered, voice-based customer interaction technology. Financial terms were not disclosed. 

- Transaction Network Services, backed by Koch Equity Development, acquired West Highland Support Services, a Danbury, Conn.-based provider of financial market data solutions. Financial terms were not disclosed. 

- Washington Harbour Partners acquired SIXGEN, an Annapolis, Md.-based cyber solutions company for the U.S. national security, intelligence, and defense communities, and critical commercial industries. Financial terms were not disclosed.

OTHER

- Out&Back Outdoor acquired The Locals Sale, a Telluride, Colo.-based outdoor gear exchange company. Financial terms were not disclosed. 

IPOS 

- Starlink, the satellite internet business of SpaceX, is considering an IPO as soon as 2024, per Bloomberg. SpaceX CEO Elon Musk, however, called the report “false.

FUNDS + FUNDS OF FUNDS

- Coatue Management, a New York City-based private equity firm, raised $1.4 billion in a companion fund to its VC growth fund, sources with direct knowledge told The Information.

- Material Impact, a Boston, Mass.-based venture capital firm, raised $352 million for its third fund focused on innovative science and engineering companies. 

PEOPLE

- Engine Ventures, a Cambridge, Mass.-based venture capital firm, promoted Michael Kearney to general partner.

- Pillar VC, a Boston, Mass.-based venture capital firm, hired John Casey as a venture partner. Formerly, he was with Senda Biosciences.