There’s a huge scandal in the HR-Tech world. Two unicorn competitors are suing over alleged corporate espionage. A story worth billions.
There’s a huge scandal in the HR-Tech world. Two unicorn competitors are suing over alleged corporate espionage. A story worth billions.
Long Story Short: HR company Rippling, which hires IT professionals, claims that its competitor, Deel, has grown a mole in its ranks.
Rippling allegedly caught the spy using a «honeypot» test in Slack. Deel denies these allegations.
On Monday, Rippling sued its competitor Deel, accusing it of a «corporate espionage scheme.» Deel denies the allegations.
Both companies are Delaware corporations based in San Francisco, California. Deel offers a global SaaSy payroll service; Rippling offers a competing service among a broader set of HR applications. Each startup is valued at $12-14 billion, making them so-called unicorns.
According to Rippling’s lawsuit, Deel recruited a Rippling employee — identified only as D.S. — as a spy with the goal of stealing confidential information.
Rippling alleges that Deel intended to steal confidential business information and trade secrets in a brazen and systematic manner — by cultivating a «spy» within Rippling.
According to the plaintiff, the employee used Rippling systems to spy on Deel customers who were discussing switching from Deel. He also allegedly gained access to other employees’ personal information so Deel could try to poach key personnel, the lawsuit says.
The lawsuit states that Ripling seeks to stop the misuse of its confidential information and to obtain compensation for the alleged harm caused to Deel, among other things.
After a series of leaks, Rippling said it had staged a «honeypot» test earlier this month to lure out a «mole»: It told two members of Deel’s senior management and an outside legal advisor that Rippling employees were discussing information about Deel that could be embarrassing if made public, and that they were doing so in a Slack channel called «d-defectors.»
Within hours, the «mole» had found and accessed the decoy channel; this, according to Rippling, proved «beyond any doubt that Deel senior management, or someone acting on their behalf, was leaking information from the #d-defectors channel to a Deel spy inside Rippling.»
An employee with the nickname D.C., who lived in Ireland, joined Rippling in June 2023 as a global payroll compliance manager and was given access to Rippling’s internal HR systems, as well as Slack, Salesforce and Google Drive accounts, the lawsuit alleges.
Last week, Rippling obtained a court order in Ireland, where the alleged mole lives, that guaranteed the preservation of the information on his phone. However, when served with the subpoena, he lied about the location of his phone and locked himself in the bathroom, «ostensibly to delete evidence from his phone.»
In late 2024, D.C. allegedly began searching Rippling’s Slack channels for information that might be useful to Deel. He was particularly interested in information about Rippling’s sales channel.
«Overall, DC’s Slack activity logs show that he surreptitiously viewed and downloaded information from Rippling’s Slack channels designed for prospective customers more than 1,300 times between November 2024 and March 2025,» the complaint states. «Rippling’s forensic investigation uncovered multiple instances of DC stealing the sales and marketing trade secrets of these prospective customers, demonstrating an intent to appropriate them for Deel’s commercial gain.»
After confirming that Deal was behind the massive search of internal documents, Rippling obtained a warrant from the High Court of Ireland to preserve data from D.S.'s phone, and a court-appointed independent lawyer served the order.
According to a filing this week in San Francisco, D.C. refused to comply with an Irish court order, putting himself at risk of arrest. He allegedly lied to his court-appointed attorney about the location of his phone and «then locked himself in the bathroom, ostensibly to delete evidence from his phone. All this while an independent attorney repeatedly warned him not to delete the materials from his device because doing so would violate the court order, which carries criminal penalties.»
When warned by his attorney about violating the court order, the alleged spy responded, «I’m willing to take that risk,» before fleeing the scene, the complaint states.
«We are all for healthy competition, but we will not tolerate when a competitor breaks the law,» Vanessa Wu, Rippling’s general counsel, said in a statement on Monday. «The scale of this corporate espionage is staggering — it permeates their sales, marketing, recruiting and even communications operations.»
A Deel spokesperson dismissed the lawsuit as a diversionary tactic: «Weeks after Rippling was accused of violating Russian sanctions and spreading false information about Deel, Rippling is attempting to change the narrative with these sensational claims,» a company spokesperson told The Register. «We deny all legal wrongdoing and look forward to filing our counterclaims.»
When asked whether Deel was accusing Rippling of violating sanctions, a Deel spokesperson said: «We are not alleging that this is a violation: 'We are not alleging that, it was reported in this story.'
However, Deel itself is also accused of violating sanctions against Russia, according to a lawsuit filed in Florida earlier this year by court-appointed trustee Melanie Damian. The complaint alleges that Deel processed payments on behalf of former client Surge Capital Ventures in violation of the sanctions.
A Deel representative told HR Dive via email that Rippling was «spreading lies» in an attempt to change the narrative through sensational claims after Rippling was accused of violating «Russian sanctions laws.»
«We deny all legal wrongdoing and look forward to filing our counterclaims,» a company spokesperson said.
