The bitter feud between HR-tech rivals Rippling and Deel has escalated from a Silicon Valley grudge match into a potential criminal matter, with the US Department of Justice reportedly probing whether Deel orchestrated an elaborate corporate espionage scheme targeting Rippling.

According to reporting, federal prosecutors are examining allegations that Deel paid a Rippling employee to steal confidential information, including sales leads, product roadmaps, customer data and internal performance rankings. That employee was exposed in a sting operation, then admitted in a sworn statement in an Irish court that he had been acting as a paid spy for Deel and funnelling intelligence directly to its executives.

Rippling’s ongoing civil lawsuit paints the operation as a kind of startup-era crime thriller, accusing Deel of running a “criminal syndicate” and invoking the federal racketeering statute typically associated with mob prosecutions. Deel has denied wrongdoing and says it is unaware of any criminal investigation, insisting it will cooperate with authorities if asked.

The legal war is now running on multiple fronts. Rippling sued first, alleging corporate spying and racketeering. Deel countersued, accusing Rippling of its own underhanded tactics, including allegedly impersonating a customer to gain information. Each side claims the other is waging a smear campaign as they battle for dominance in the lucrative global payroll and HR software market.

The confessed spy has become a central, and contested, figure. He agreed to cooperate with Rippling, which in turn agreed to cover his legal and travel costs. Deel now brands him a “paid witness.” Court filings show the man later told a judge his family was living in fear, claiming he was being followed by men he believed were linked to Deel. Deel’s lawyer initially denied any surveillance, then acknowledged the company had in fact hired private investigators.

Financial records obtained by Rippling appear to tighten the narrative: bank documents show Deel transferring money to an account controlled by the wife of its chief operating officer, followed seconds later by an identical transfer to the spy’s account.

The stakes are enormous. Deel, led by founder and CEO Alexandre Bouaziz, was recently valued in the tens of billions of dollars, as was Rippling. Both have hired heavyweight legal firepower, signaling they expect a long, bruising fight that could reshape how far high-growth startups are willing to go in their race for market share.