SoftBank has recently filed a lawsuit against a UK-based immersive robotics company called IRL which stands for In Reality Limited. The lawsuit alleges that the company took part in a “massive and elaborate” international fraud scheme to fraudulently obtain more than $150 million from SoftBank’s Vision Fund.
The lawsuit alleges that IRL, started by serial entrepreneur Jonathan Lu, took advantage of SoftBank’s investments and “created a false and elaborate scheme” in order to snag massive amounts of capital from Softbank’s Vision Fund. The documents filed by SoftBank in the lawsuit accuse IRL of misrepresenting the success of its technology, inflating its valuation, and using “shell” companies to funnel money back to Lu’s own accounts. As a result, SoftBank claims it was tricked into investing more than $150 million in IRL’s technology, money that was never repaid.
The lawsuit also accuses IRL of engaging in a “fear-driven” tactic to keep SoftBank from discovering the massive fraud, which included deleting or doctoring key documents that SoftBank had requested. This deceitfulness, according to the complaint, was used to keep SoftBank from learning about the fraud and also to keep SoftBank from demanding payment of the money that had already been invested.
SoftBank is claiming negligence, breach of contract, and fraud in the lawsuit and is seeking the return of more than $150 million. The company has demanded that Lu and IRL hand over any profits they made as a result of this alleged fraud, as well as the repayment of all of the money that was invested.
This lawsuit is sure to be a cautionary tale for venture capitalists and aspiring entrepreneurs alike. It appears to be a case of significant misrepresentations and a massive fraud which would have disastrous effects on SoftBank’s reputation and trustworthiness. It will be interesting to see how this case plays out and what lessons can be learned from it.
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