In a rare escalation of Silicon Valley rivalries into federal criminal territory, the Justice Department has launched a criminal investigation into allegations that Deel Inc., a high-flying HR software unicorn valued at $17.3 billion, orchestrated corporate espionage against competitor Rippling. Grand-jury subpoenas issued by U.S. Attorney Craig Missakian in the Northern District of California seek details on claims that Deel CEO Alex Bouaziz directed a Rippling employee to steal sensitive data, according to documents reviewed by The Wall Street Journal.

The probe centers on Keith O’Brien, an Ireland-based Rippling employee who in an April affidavit claimed Bouaziz recruited him for the scheme, providing specific instructions on information to extract. O’Brien alleged involvement from other Deel executives, including Bouaziz’s father, the company’s executive chairman and chief strategy officer. Unsealed documents further detail a $6,000 transfer from a Deel-linked entity to an account owned by the wife of Deel COO Dan Westgarth, which was then forwarded to O’Brien moments later.

Spy’s Confession Ignites Federal Scrutiny

Deel, which streamlines global hiring by managing paperwork, compliance, and payroll for international expansions, has denied wrongdoing. A spokeswoman stated the company is unaware of the criminal probe but ready to cooperate, echoing prior assertions: “We deny all legal wrongdoing and look forward to asserting our counterclaims.” Bouaziz, his father, Westgarth, and O’Brien’s lawyer declined comment.

The allegations first surfaced publicly in March 2025 when Rippling sued Deel, accusing it of planting a mole who downloaded internal records and met with Deel leadership. A former Rippling employee confessed in an Irish court affidavit to spying under Bouaziz’s directive, as reported by Reuters. Rippling uncovered the breach via a “honeypot” trap on Slack, baiting the insider with fake sensitive data, according to The New York Times.

Rippling’s Trap Exposes Deeper Plot

Rippling’s lawsuit, filed in Delaware Superior Court, detailed how the spy exfiltrated customer lists and competitive intelligence. Deel fired back with an amended complaint in June, presenting its own evidence of Rippling’s misconduct, per Deel’s blog. The feud has spilled into Irish courts, where Bouaziz recently challenged High Court jurisdiction over claims he instructed O’Brien to spy and violated a court order, as covered by The Irish Times.

Despite the turmoil, Deel’s business momentum persists. An October 2025 funding round boosted its valuation from $12 billion to $17.3 billion, signaling investor confidence amid the scandal. Backed heavily by Andreessen Horowitz, which held a 20% stake worth nearly $3.5 billion at the new mark, Deel eyes an IPO this year or next. A firm spokeswoman did not respond to comment requests.

Valuation Surge Defies Scandal Headwinds

Rippling, no stranger to growth in the cutthroat HR tech arena, positions itself as a unified platform for payroll, IT, and benefits. Its complaint paints Deel’s actions as a systematic theft operation, with forensic evidence showing mass data downloads. Varonis analysis described it as potentially “the largest corporate espionage case this century,” outlining prevention lapses like inadequate access controls, via Varonis.

The Axios probe noted the dispute’s escalation, including third-party involvement like Global Partners, yet neither firm has seen customer or investor fallout. CNBC reported Rippling’s initial suit claiming the spy’s recruitment predated employment, with meetings at Deel’s San Francisco office. TechCrunch highlighted Slack logs as pivotal evidence, with Rippling dropping fake deal data that the insider bit on.

Civil War Spills Into Criminal Territory

As the Justice Department’s involvement marks a shift from civil suits to potential indictments, insiders watch for parallels to past tech espionage cases like Uber-Waymo. Subpoenas target communications, payments, and data flows, probing violations of the Economic Espionage Act. Rippling’s March filing alleged Deel cultivated the spy over months, per its blog.

O’Brien’s affidavit, unsealed in Ireland, detailed Bouaziz’s directives for sales pipelines and pricing strategies. Deel countered that Rippling’s claims are baseless retaliation in a competitive market. The probe’s timing, post-October funding, underscores how allegations haven’t derailed Deel’s trajectory, with recent X posts from firm accounts showing business-as-usual promotions.

Global Courts and Federal Eyes Converge

Legal fronts multiply: Delaware civil battle, Irish injunctions, and now U.S. criminal scrutiny. Web searches reveal no charges yet, but grand-jury activity signals momentum. Posts on X from industry observers speculate on outcomes, though inconclusive, reflect divided sentiment on Deel’s culpability versus competitive sabotage claims.

For HR tech executives, the saga underscores risks in talent wars amid global expansion. Rippling’s honeypot success highlights proactive security’s value, while Deel’s valuation climb suggests markets prioritize growth over headlines. As subpoenas circulate, the Valley braces for possible arrests or settlements reshaping executive accountability.

Unicorn Rivalry Tests Legal Boundaries