The Match Group have agreed to pay the Tinder founders $441 million USD to settle an ongoing lawsuit. The lawsuit revolves around when Tinder’s executives claimed that the parent company deliberately undervalued the app to avoid paying billions of dollars.
The lawsuit has been ongoing since August 2018, when the Tinder founders including Sean Rad, Jonathan Badeen, and Justin Mateen, sued the Match Group and IAC for $2 billion USD. The lawsuit began with:“Tinder is one of the fastest-growing startups in the history of the technology industry. The Tinder Plaintiffs are the founders, current executives and early employees who built Tinder. (…) This case arises from Defendants’ scheme to cheat the Tinder Plaintiffs out of billions of dollars by violating their contractual rights as option holders.
They argued that in 2014, Match and IAC signed written contracts awarding stock options to the plaintiffs. These options represented over 20% of the value of Tinder. The plaintiffs were then invested in the company – having “skin in the game”. They could sell and hold their options in the future. Because Tinder was a private company, however, they were not free to sell their stakes publicly / at any time.
The parties agreed on a series of four fixed future dates where the stock options would be independently valued. The holders could then decide whether to sell back to the parent company, or whether to continue to hold. The four ‘Scheduled Puts’ were initially timetabled for May 2017, November 2018, May 2020 and May 2021.
With Tinder’s value projected to skyrocket when the stocks were initially issued, the plaintiffs suggested that the umbrella companies conspired to lie about the company’s value at the May 2017 Scheduled Put (which occurred in private, not damaging public perceptions).
The lawsuit has been marred in controversy throughout its hearing, including the accusation of sexual assault against former Tinder CEO Greg Blatt, which in turn led to a counter-lawsuit against Tinder co-founder Sean Rad, and the original plaintiff, former VP of marketing and communications Rosette Pambakian.
Blatt was then again caught in controversy when leaked emails showed that former Tinder CEO Greg Blatt potentially valued the dating app as high as $11.75 billion, just one year before its founders and early employees were paid out on their stock options based on a $3 billion valuation. He was then also accused of bullying during the trial after an altercation with Sean Rad during the trial.
The lawsuit originally went to trial on 8th November 2021 in the New York Supreme Court.
Read more on the lawsuit settlement here.