Deel sued by Rippling for spying and stealing client data in HR tech giants' showdown
Rippling accuses Deel of industrial espionage, claiming stolen customer data and trade secrets.
American technology company Rippling filed a lawsuit in the U.S. on Monday against Israeli-American human resources giant Deel, alleging industrial espionage.
In the lawsuit, Rippling claims that Deel recruited one of its employees to conduct thousands of searches on its systems, stealing information and selling customer secrets and data. According to reports, when confronted with a court order, the alleged spy locked himself in a bathroom and refused to hand over his phone before fleeing the premises. The stolen data allegedly helped Deel intercept sales efforts, retain customers considering switching to Rippling, and recruit employees.
The lawsuit further claims that Rippling proved the involvement of Deel's senior executives through a trap involving a fake Slack channel. According to Rippling, it “crafted a letter that referenced an empty Slack channel in Rippling’s corporate Slack instance called “d-defectors,” and implied the Slack channel contained messages that would be of interest to Deel.
“The letter was sent to only three people – Phillipe Bouaziz, the chairman of Deel’s board, CFO, General Counsel, and the father of Deel CEO Alex Bouaziz; Spiros Komis, Deel’s Head of US Legal; and the company’s outside counsel at law firm.
“Within hours of sending the letter, Deel’s spy inside of Rippling searched – for the first time – for this empty and never-before-used Slack channel, proving that Deel’s top executives or its legal representatives were running the covert espionage operation.”
Deel was founded in 2019 by Alex Bouaziz and his father, Philippe Bouaziz, and was part of the Y Combinator accelerator, an American startup incubator that has produced companies such as Airbnb, Stripe, and DoorDash. Deel's platform enables global workforce management, even for small companies. It currently operates in 150 countries and employs 5,000 people. Alex Bouaziz serves as Deel's CEO, while Philippe is the CFO. Another co-founder is entrepreneur Shuo Wang, who serves as CRO.
The company recently announced a $300 million secondary funding round aimed at allowing existing investors to sell their shares. The round was conducted at a $12 billion valuation, with participation from investors including General Catalyst and Mubadala, the Abu Dhabi sovereign wealth fund. To date, Deel has raised approximately $680 million, excluding the latest secondary round.
Deel is also facing other legal challenges. In January, a lawsuit was filed in Florida alleging that the company handled payment transfers without the proper license, facilitating $2.27 million in money laundering. The lawsuit also claims that Deel processed payments to Russia, potentially violating U.S. sanctions. Deel has denied all allegations.
Deel responded to Rippling’s lawsuit, stating: “Weeks after Rippling is accused of violating sanctions law in Russia and seeding falsehoods about Deel, Rippling is trying to shift the narrative with these sensationalized claims. We deny all legal wrongdoing and look forward to asserting our counterclaims.”
