A hedge fund is now suing Theranos, citing “lies, material misstatements, and omissions”

Partner Fund Management (PFM), a San Francisco-based hedge fund that reportedly wrote out a $96 million check to Theranos back in 2014, is now suing the blood-testing startup and its founder, Elizabeth Holmes, saying it was duped into its investment “through a series of lies, material misstatements, and omissions,” and accusing the firm of engaging in “securities fraud and other violations by fraudulently inducing” it to invest and to maintain its investment in the company.

The $198 million Series C-2 round in which Partner appears to have participated drove the firm to a reported valuation of $9 billion. Fortune wrote about the round in June 2014 in a flattering feature story about Holmes, for which it later published a protracted correction.

According to the WSJ, in a letter sent earlier today to its shareholders about the suit, filed in a Delaware court, Partner says Holmes and another former Theranos executive blatantly lied to the hedge fund by claiming it had developed “proprietary technologies that worked” and that it was nearing regulatory approvals.

Theranos is saying the “suit is without merit, and Theranos will fight it vigorously.”

Theranos announced last week that it’s shutting down its laboratory operations and firing 340 people — about 40 percent of its staff — to focus instead on an initiative to create small medical testing machines.

The new miniaturized devices aim to allow lab tests to be “decentralized” and carried out at more locations, but it underwhelmed an audience of scientists, doctors, and lab professionals when unveiled at a medical conference in Philadelphia in August.

Researchers began airing doubts about Theranos more than a year ago, arguing that its biggest claims weren’t substantiated in any scientific publications. After the The Wall Street Journal began casting even more serious doubt on whether Theranos’s technology actually worked, federal regulators began scrutinizing the company more closely and barred Holmes in July from owning or operating a medical laboratory for at least the next two years.

Theranos has raised at least $750 million from investors since its official founding in 2003, according to numerous reports, including in the WSJ. Its early backers include DFJ, ATA Ventures, Continental Ventures, and Tako Ventures, shows CrunchBase. According to an October 2015 Fortune report, some of its later-stage investors include BlueCross BlueShield Venture Partners, Continental Properties Co., Esoom Enterprise of Taiwan), Jupiter Partners, Palmieri Trust, Dixon Doll, Ray Bingham and B.J. Cassin.

Partner is seeking to recoup its investment; it’s also asking for damages, according to a source who spoke with the WSJ.