Winklevoss Twins Question Value of $65M Facebook Settlement

Tweet

Facebook is undoubtedly the fastest-rising star in the Internet today. The social network was recently valued at US$ 50 billion, after raising $500 million in fresh financing from investors, including Goldman Sachs. However, there are people who claim ownership of the idea.

In 2008, Tyler and Cameron Winklevoss claimed that Mark Zuckerberg stole the social networking idea from them while in Harvard. The twins co-founded HarvardConnection, which then became ConnectU, which allegedly contained the underpinnings of what is now Facebook after Mark Zuckerberg allegedly ran off with the idea. This was also the basis of the dramatized film The Social Network, which supposedly told the story of Facebook’s founding.

The lawsuit was settled by Facebook for shares in the company valued at US$ 65 million. All seemed well until recently, when the Winklevosses were disputing the settlement. They say they were cheated out of the value that Facebook actually had, with their shares being supposedly worth $35.90 each at the time of settlement, when they claim the intrinsic value was only $8.88. They say that Facebook accountants and lawyers seemed to have committed securities fraud with this flawed valuation.

The reversal of the settlement is still pending in a federal Court of Appeals. If judges rule against the Winklevosses, they still get to keep their settlement–now valued at $140 million. If judges rule in favor of them, then they forfeit the settlement, but this means that the ownership of Facebook would actually go to trial.

It’s certainly a gamble that both sides will have to take, and it will involve millions of dollars and a whole lot of buzz in the social networking scene.