Tinder’s co-founders and several current senior executives are suing the platform’s parent company for $2 billion in damages, according to a complaint filed today. The lawsuit claims that Tinder’s owner, IAC and Match Group, robbed the employees by lowering Tinder’s valuation and taking away their stock options.
The 10 plaintiffs include co-founders Sean Rad, Justin Mateen, and Jonathan Badeen, three current executives, as well as former executives and directors.
According to the suit, there were written contracts between IAC and the employees for Tinder to be valued on dates in 2017, 2018, 2020, and 2021 when they would be given the chance to exercise stock options. But instead, IAC merged Tinder into Match Group in 2017, and by doing so, it’s alleged to have intentionally undervalued Tinder. Then, when Tinder stock options were converted into Match stock, the employees received fewer and less valuable options.
The lawsuit alleges IAC created false financial information, lied about Tinder’s continued rapid growth, and delayed the launch of important features that drive the platform’s revenue, like Tinder Gold, in order to lower the company’s valuation.
Last week, during IAC’s earnings call, the company stated that Tinder was on pace to earn $800 million in revenue this year, which is allegedly 75 percent more than the projections Match made to the employees last year.
“When it came time to pay the Tinder employees what they rightfully earned, the defendants lied, bullied, and violated their contractual duties, stealing billions of dollars. A jury will now hold the defendants responsible for their multibillion-dollar theft,” attorney for the employees, Orin Snyder from the law firm Gibson, Dunn & Crutcher, stated in a press release. The suit also alleges that Greg Blatt, who was placed as interim CEO of Tinder to replace Rad, groped and sexually harassed Tinder VP of marketing Rosette Pambakian, but IAC did not fire him as it needed him to complete the merger.
We’ve reached out to Match for comment. In a statement toRecode, the parent company responded, “Since Tinder’s inception, Match Group has paid out in excess of a billion dollars in equity compensation to Tinder’s founders and employees.” The statement continues, “Match Group and the plaintiffs went through a rigorous, contractually-defined valuation process involving two independent global investment banks, and Mr. Rad and his merry band of plaintiffs did not like the outcome…We look forward to defending our position in court.”
Here’s IAC’s full statement on the lawsuit: pic.twitter.com/QwXyAbk4kn
— Kurt Wagner (@KurtWagner8) August 14, 2018
Update August 14th, 2:14PM ET:This article has been updated with a statement from IAC.