A New York Supreme Court judge rejected a motion by IAC and its subsidiary Match Group, which owns the dating app Tinder, to dismiss a case brought forward by Tinder co-founder Sean Rad, alleging that the IAC and Match purposefully undervalued Tinder’s growth potential to avoid paying billions of dollars in stock options to the company’s original team. Rad is suing for US$2 billion. A date for the next hearing has not been set. (The Verge)
Talking point: This is the biggest lawsuit within the larger controversy, which centres on allegations that insiders intentionally undervalued Tinder at multiple stages of its development, leading early investors to miss out its eventual earnings—it’s parent company Match has a market cap of more than US$20 billion. In May, The Logic broke the news that Social Capital CEO Chamath Palihapitiya and prominent Toronto venture capitalists Amar Varma and Sundeep “Sunny” Madra were ordered to pay US$15.69 million by the Ontario Superior Court of Justice for undervaluing Xtreme Labs—which held a 13 per cent interest in Hatch Labs, the developer of Tinder—when they sold it in 2012. The judge in that case found that Palihapitiya, Varma and Madra had engaged in “conspiracy” and “unlawful conduct.” The latter two intend to appeal.