Ex-Owner of Avito's Roomberry Reaches Out-of-Court Settlement after Investor Dispute

A lawsuit brought against the ex-owner of Avito subsidiary RoomBerry has been settled out of court amid claims of fraudulent activity.

Mikhail Khaikin, founder of Roomberry, will pay an undisclosed sum to the Russia-based Internet Initiatives Development Fund (IIDF) after the IIDF accused Khaikin of presenting misleading revenue numbers when it divested of its 7% stake in Roomberry last year.

The claim is that Khaikin showed falsified underwhelming results to IIDF to persuade the fund to sell its stake for a discount price before Khaikin then sold his company to Avito—the biggest classifieds site in Russia and one of the biggest in the world—in February this year.

According to the suit, Khaikin told IIDF in June 2022 that he and the other shareholders were planning to shut down Roomberry due to a massive anticipated loss of revenue.

Roomberry relied heavily on traffic coming from Western social media such as Facebook and Instagram which were outlawed in Russia following the invasion of Ukraine and resulting Western sanctions. Local media outlet RBC claimed to have seen a letter from Khaikin to IIDF claiming that as a result of the loss of traffic, a contract worth 80-85% of Roomberry's revenue was due to be discontinued. IIDF relented and divested at a loss of RUB1 Million ($12,000).

IIDF claims to have discovered that in January 2020, Khaikin registered a second legal entity which ran in parallel with Roomberry and was used to conceal around half of the real estate marketplace's revenue. The lawsuit claimed that this was part of a "multi-stage preparation" to encourage IIDF to withdraw its stake in Roomberry with minimal costs to the founders.

Khaikin will now compensate the fund without the lawsuit reaching the courtroom.