Tinder’s co-founders and several current senior executives are suing the platform’s parent company seeking at least $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 in doing so, is 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.
Tinder is one of Match Group’s biggest and most profitable brands. Features like Tinder Gold and other in-app purchases have led the platform to be the top-grossing iOS app as of last September. But according to the lawsuit, despite the boost in revenue, IAC continued to value Tinder at $3 billion, which was the same valuation it gave the platform two years before the merger with Match. IAC also allegedly threatened to fire these employees if they revealed how much Tinder was actually worth.
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.