By Carlo Versano
Federal regulators have subpoenaed Snap as part of a probe into its 2017 initial public offering, the company confirmed in a statement to Cheddar.
Reuters first reported the subpoenas late Tuesday.
The subpoenas, filed by the Justice Dept. in coordination with the SEC, are believed to be related to a class action lawsuit filed by a group of investors in May 2017 that alleged the company misrepresented how competition from Facebook's Instagram ($FB) was affecting its growth ahead of the $3.4 billion IPO, and misled the public about its user metrics.
In the statement, Snap said: “While we do not have complete visibility into these investigations, our understanding is that the DOJ is likely focused on IPO disclosures relating to competition from Instagram."
The social-messaging app has suffered from the competition with Instagram, which launched a near-identical feature to Snapchat's core service in 2016 and now boasts double the users. The company has also seen some of its top talent leave, including most recently the head of content, Nick Bell.
Snap stock is trading at less than half its IPO price.