Yahoo! Sued Over Chinese Dissident Fund

Seeks to ensure money is used for humanitarian aid to imprisoned dissidents

Could Yahoo! be adjusting the terms of its sale agreement to Verizon yet again?

A federal lawsuit was filed Tuesday (April 11) in Washington against Yahoo! alleging it had mismanaged millions in a fund for Chinese dissidents created as part of a 2007 agreement.

The suit was filed in the U.S. District Court for the District of Columbia.

Following allegations it had provided the identities of Yahoo! users to China, Yahoo! agreed to set up the $17.3 million trust fund and pledged it would assist dissidents imprisoned for speaking out online, according to the suit, .

The suit, filed on behalf of some of the dissidents by law firm Cohen Milstein Sellers & Toll, alleges that fund was used for other purposes than the pledged humanitarian assistance and that, to date, only 4% of the original $17.3 million "has been used to provide aid to imprisoned dissidents."

The suit asks that the fund be restored to its original amount and Chinese dissidents be made the sole beneficiaries of the money, and also seeks a full accounting of all the trusts assets and expenditures.

Yahoo! had not returned a request for comment on the suit at press time.

In February, Yahoo! agreed to cut the sale price by $350 million in the wake of data breaches affecting hundreds of millions of e-mails.

Currently the deal is valued at $4.48 billion in cash, with some closing adjustments, and was expected to close in second-quarter 2017.

Those breaches drew heavy scrutiny in Washington.