Chinese gaming company Beijing Kunlun Tech Co, which has owned Grindr since 2016, is reportedly looking to sell it off, with Reuters reporting that the Committee on Foreign Investment in the United States (CFIUS) has branded it a national security risk.

Reuters said that the CFIUS, a US Government national security body, has raised serious concerns over the app’s ownership. According to people familiar with the matter, the decision to put the app up for sale is a result of this.

Grindr has come under greater scrutiny from the US over how the app handles its users’ sensitive personal data – in particular, that of US military or intelligence personnel.

The app holds data that includes personally identifiable and sensitive user information such as HIV status, email address, telephone number, precise geolocation, sexuality, relationship status, ethnicity and last HIV tested date.

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When Kunlun acquired the company via two separate deals between 2016 and 2018 it did not submit the acquisition to the CFIUS for review, which put it at risk of such an intervention.

This designation has disrupted the Chinese company’s intention to make an initial public offering (IPO) of Grindr, a plan it announced in August 2018.

Now, as a result of CFIUS’ action, it has instead decided to start an auction process in order to sell the app outright.

Sources close to the situation told Reuters that the company has engaged investment bank Cowen Inc to handle the sale, and is seeking acquisition interest from its competitors, as well as US investment firms.

Representatives for Kunlun, Grindr, and Cowen all did not respond to requests for comment by Reuters. A US Department of the Treasury spokesmen, which chairs the CFIUS, said the panel does not comment publicly on individual cases.

Reuters says the app’s security risks will not be fixed by the sale. However, it will stop Grindr being owned by a Chinese company, which is reportedly among the undisclosed key reasons why it was labelled a risk.

SCRUFF CEO, Eric Silverberg, commented: “The issue is not one of internal company policy, but instead one of jurisdictions.

“Companies must abide by the laws and regulations of the country in which they are headquartered, in addition to the laws and regulations of the country in which their data is stored.

“Should one country have looser or less rigorous standards for privacy or security, those are the standards which de-facto will be applied.

“All apps should be open and transparent with their users about where their data is stored, the jurisdictions within which they fall, and the third parties with whom their data is shared.”

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