Ten of the co-founders and early employees of Tinder filed a lawsuit against InterActiveCorp (IAC) and Match Group, the owner of the dating app, on Tuesday. The plaintiffs include co-founders Justin Mateen, Jonathan Badeen, and Sean Rad. They allege that the corporate owners intentionally attempted to manipulate the valuation of Tinder, in order to lessen the pay-out price for the stock options of the early employees, and that it opted to restructure Tinder within Match in order to deny them future pay-outs.
Gibson Dunn serves as the representative of the ten plaintiffs.
The suit reads: “Tinder is one of the fastest growing startups in the history of the technology industry.”
It continued: “This case arises from Defendants’ scheme to cheat the Tinder Plaintiffs out of billions of dollars by violating their contractual rights as option holders.”
IAC has already denied the allegations.
The said lawsuit states that IAC/Match owes the plaintiffs “billions” of dollars. It alleges IAC/Match of assigning executives that would make erroneous financial statements, and that the firm manipulated the reports of the financial and media industry in order to facilitate the further reduction of stock prices. Allegedly, it delayed transformative product launches, which included Tinder Gold, until after the buyout windows of the plaintiffs. And it reorganized the role of Twitter within IAC, absorbing it into Match, specifically to remove the plaintiffs of their options and future selling windows.
A lot of this has to do with the 2017 valuation of Tinder amounting to $3 billion. The lawsuit says that the figure is bogus. It also said that it was established specifically to reduce the amount that IAC/Match would be required to pay out the Plaintiffs for their options. It states that the amount made no sense, since it was the same valuation as that of 2014, despite the massive growth of the company. Only one week after the valuation, the suit states that “Match’s market capitalization increased by approximately one billion dollars.” Also, it projected that Tinder would earn revenue amounting to $454 million, while at its most recent earnings call, Match declared that it was “on pace to exceed $800 million.”
The suit reads: “Defendants’ admissions of Tinder’s continued explosive growth and financial success confirm that their valuation projections in 2017 were a farce.”