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Tinder’s co-founders are suing former parent company IAC for at least $2 billion

Co-founder Sean Rad says IAC purposefully deflated Tinder’s valuation in order to avoid paying him.

Tinder co-founder Sean Rad
Tinder co-founder Sean Rad
Asa Mathat

Tinder co-founder Sean Rad’s saga with former parent company IAC has started a new chapter.

Rad and some of Tinder’s other co-founders and employees filed a lawsuit Tuesday against IAC that claims, among many other things, that Tinder’s holding company purposefully undervalued the dating service so that IAC wouldn’t be on the hook to pay those co-founders, who combined own more than 20 percent of Tinder, as much money for their shares.

The situation: IAC, which owned Tinder, signed contracts with early Tinder employees agreeing to value the company at four separate times, once in 2017, 2018, 2020 and 2021. Employees would then be free to sell their stock options in Tinder based on those valuations.

Tuesday’s lawsuit claims that IAC used “misleading and incomplete financial information” to value Tinder at $3 billion in 2017, below what Rad and others think the company was worth. Tinder will bring in about $800 million in revenue this year, which is 75 percent higher than the projected revenue number used to calculate the 2017 valuation, the suit claims.

IAC then merged Tinder with Match Group, another IAC property, cancelling the three remaining scheduled valuation dates. Tinder co-founders now have shares in Match Group, a much larger company in which Tinder is the star product of many, versus shares in Tinder directly. “Tinder’s our big growth engine,” Match Group CEO Mandy Ginsberg said on Recode’s podcast last month.

Tinder’s co-founders and employees are asking for at least $2 billion in damages.

“Through deception, bullying, and outright lies, IAC/Match stole billions of dollars from the Tinder employees,” the lawsuit’s plaintiffs wrote in a press release. The release also said that “IAC/Match cooked the books to manufacture a fake lowball valuation of Tinder.”

The lawsuit, which is 55 pages long, includes lots of damning claims. Included among them is a claim that former Tinder CEO and IAC executive, Greg Blatt, “groped and sexually harassed” Tinder’s VP of communications and marketing, Rosette Pambakian, at a 2016 company holiday party. Pambakian, who is listed as a plaintiff on the lawsuit, still works at Tinder, according to her LinkedIn.

Blatt was listed as “Vice Chairman” of Match Group’s board of directors as of Tuesday morning, but a filing shows he resigned from the board last Friday.

A Match Group spokesperson did not immediately reply to a request for comment.

Update: Here’s the full statement from an IAC/Match Group spokesperson:

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. Mr. Rad (who was dismissed from the Company a year ago) and Mr. Mateen (who has not been with the Company in years) may not like the fact that Tinder has experienced enormous success following their respective departures, but sour grapes alone do not a lawsuit make. Mr. Rad has a rich history of outlandish public statements, and this lawsuit contains just another series of them. We look forward to defending our position in court.

Tinder was founded in 2012, but has a scandalous history that makes the company seem much older.

For starters, Rad was publicly pushed out at Tinder — it was an ugly split — then re-hired for a short time before Blatt was brought in as his replacement. Another former Tinder co-founder, Whitney Wolfe Herd, sued Tinder back in 2014 with claims of sexual harassment against another co-founder, Justin Mateen, who is a plaintiff on Tuesday’s suit. Wolfe Herd then went on to found Bumble, another popular dating service, which IAC sued in March for patent infringement.

This article originally appeared on Recode.net.