Current Tinder executives and three of Tinder’s owners are alleging that the dating app’s parent company has cheated them out of as much as $2 billion by manipulating financial information to give them stock options that a little over one-fifth of Tinder’s value.
The ten individuals include co-founder and former CEO Sean Rad, co-founder and former CMO Justin Mateen, who filed in New York Supreme Court. IAC and Match created an artificially low valuation of Tinder and avoided paying the group the money they’re owed under stock options agreement by using “false, misleading and incomplete financial information and projections,” the ten plaintiffs claimed.
“We were always concerned about IAC’s reputation for ignoring their contractual commitments and acting like the rules don’t apply to them,” Rad said in a statement, as reported by Bloomberg. “But we never imagined the lengths they would go to cheat all the people who built Tinder.”
For their part, Match and IAC claimed the founders had “sour grapes”, stating:
“The facts are simple: 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.”
Tinder was launched in 2012 after taking shape in a startup incubator run by IAC. When parent firm Match went public in 2015, Tinder had over 30 million users in the U.S. alone. This year, Match CEO labelled Tinder as the company’s “growth engine” with expected revenues of up to $800 million.
New York-based IAC owns over 80% of Match Group with former Hollywood executive Barry Diller as IAC’s chairman.
Image credit: LIFARS archive.