Tinder co-founders sue parent company for $2 billion over deception

The lawsuit alleges they lowballed Tinder's valuation to shrink employee stock options.

Three of Tinder's co-founders and several other current and former senior executives are suing the dating company's parent organizations, Match Group and IAC. According to a complaint published online, the lawsuit seeks billions of dollars in damages for allegedly manipulating financial information in order to reduce Tinder's valuation and illegally take away employees' stock options.

The complaint explains that Tinder was supposed to be valued in 2017, 2018, 2020 and 2021; On those days, employees should have been able to exercise their stock options. Instead, the lawsuit alleges that parent company IAC/Match Group inaccurately lowballed Tinder's valuation in July 2017 at $3 billion, the same as it did two years ago despite the dating app's substantial growth. Then, the parent company secretly merged Tinder into Match Group, which meant employees earned far less in stock options. Then, IAC threatened to terminate anyone who revealed how much the company was actually worth, the lawsuit claims.

Tinder co-founders Sean Rad, Justin Mateen and Jonathan Badeen, three current executives and four other former execs are named on the lawsuit. It further alleges that interim Tinder CEO Greg Blatt, who had replaced Rad, sexually harassed the company's vice president of marketing and communications, Rosette Pambakian, during a company holiday party in 2016. The suit claims the incident was covered up because Blatt was spearheading the aforementioned scheme to produce an artificially low valuation of Tinder.

The suit cites last week's SEC-mandated IAC/Match Group earnings call, which noted Tinder is on track to hit $800 million in revenue thanks to premium services like Tinder Plus and the subscription-based Tinder Gold, which give users bonus features and privileges. That prediction is 75 percent higher than what IAC/Match projected when it absorbed Tinder last year, the complaint alleged.

We've reached out to Tinder and its parent company for comment and will update when we hear back. IAC and Match Group provided a joint statement to The Wall Street Journal that read:

"Since Tinder's inception, Match Group has paid out in excess of a billion dollars in equity compensation to Tinder's founders and employees. With respect to the matters alleged in the complaint, 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."