SoftBank’s Vision Fund has been accused of deliberately “destroying” a Gen Z-focused social media company it once valued at more than $1bn to safeguard its reputation as an investor amid a probe by regulators.

In a lawsuit filed on Wednesday, the co-founders of IRL, which attracted $150mn from SoftBank after being touted as an alternative to Facebook for younger users, claim the company and two other venture capital investors concocted a “flagrant, outrageous lie” that the app was almost entirely populated by bots as a pretext for closing the struggling start-up in June.

“If the company never had a real user base?.?.?.?they could position themselves?[as] the victims of a sophisticated fraud, rather than the venture capitalists who drove a billion-dollar company off a cliff in just a few short weeks,” lawyers for Abraham Shafi, Krutal Desai and Genrikh “Henry” Khachatryan wrote in their complaint.