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CEO of Ashley Madison Parent Company Steps Down

Another blow to a company that is turning out to be not all that it seemed.

Via Ashley Madison

The head of the parent company of Ashley Madison, the Canada-based site devoted to arranging extramarital trysts, is stepping down in the wake of a devastating hacking attack on its systems that has exposed hundreds of gigabytes of confidential business data on some 39 million people.

A statement from Avid Life Media said that Noel Biderman had stepped down “in mutual agreement with the company.” The existing senior management team will run the company’s operation until a new CEO can be found.

That will likely be a difficult post to fill. The hacking attack, carried out by an anonymous individual or group calling itself “Impact Team,” has, in a fashion similar to the attackers who carried out last year’s attack on Sony Pictures Entertainment, posted troves containing some of the company’s confidential business information including lists of customers and internal strategy documents.

One of those documents, revealed yesterday by Gizmodo, appears to show that the entire premise of Ashely Madison was a big put-on. While the site claimed to have 39 million users, its internal data appears to show that a good portion of the accounts created by women were faked. Moreover, a statistically insignificant portion of the accounts created by women were ever actively checked after sign-up. For all the moral hand-wringing in the media about how the site encourages spouses to cheat — I talked about it on CNN last month — it seems unlikely that there was very much cheating taking place at all.

All of this raises questions about whether Avid Life Media can realistically survive as a going concern. In April, Bloomberg News reported that the company hoped to raise as much as $200 million in an initial public offering in London. The company claimed to have $115 million in revenue, and user accounts in 46 countries. It’s unclear how far it got in the IPO process.

Its investors, Bloomberg reported at the time, were “wealthy North Americans who prefer to remain anonymous.” They’re not anonymous anymore. As reported first by The Daily Dot, Avid’s biggest shareholder with a 15 percent stake is Jason DeZwirek, the former CEO of Kaboose, a network of family-friendly sites that included Babyzone.

Biderman, the CEO who just stepped down, owns about 9 percent, the documents show.

On top of that, there’s a half billion dollars worth of lawsuits pending against the company in four U.S. states plus another suit in Canada. They won’t be the last.

Regardless of what you think of Ashley Madison and its business practices, the attack upon it and the disclosure of its data are serious crimes. The FBI and the Royal Canadian Mounted Police are both investigating. As The Verge reported earlier this week, the company has offered CA$500,000 ($379,000 U.S.) in reward money for information leading to the arrest and capture of the people responsible for the attack.

This article originally appeared on Recode.net.