When Chris Gray sold his Shark Tank-backed scholarship search startup Scholly to Sallie Mae in 2023, he thought he had it all. Now he’s suing the student loan giant for wrongful termination and alleging that it’s selling the data his app collected, which includes personal info on minors, without properly informing users.

Gray co-founded the company a decade prior with the hope of helping students more easily find college scholarships that were going untapped. Within two years, he nabbed Sharks Daymond John and Lori Greiner as investors after an appearance on the show.

With the acquisition, Gray became one of the few Black venture-backed fintech founders to exit their company, despite receiving some blowback that he was “selling out.” “I think being one of the first Black tech companies to get acquired by a bank, that’s really a big achievement,” he said at the time.

He took a vice president role at Sallie Mae and expected to settle in nicely at his new gig, while helping scale Scholly and making it free to use, he said in an exclusive interview with TechCrunch.

What happened next is detailed in Gray’s lawsuit against Sallie Mae in Delaware Superior Court, and in a whistleblower complaint he submitted to the Securities and Exchange Commission, both of which he filed earlier this month.

He alleges Sallie Mae laid off his employees, including his co-founders, and then went back on promises that it wouldn’t sell the users’ data, according to a TechCrunch review of both filings. He claims the company fired him a year after the acquisition when he tried to raise concerns about data privacy issues. In the lawsuit, Gray is seeking backpay and punitive damages in the suit, plus legal costs.

Gray told TechCrunch that before he agreed to the sale, he believed Sallie Mae would be prohibited from disclosing or selling non-public personal information about Scholly customers to third parties because it was a federally regulated financial institution.

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Now he alleges that his acquirer got around any such regulations by putting Scholly into a subsidiary that is selling the data — including age, gender, race, and other indicators of an individual’s financial need — to third parties like universities and advertisers, possibly without students’ full awareness.

“I sold Scholly to a regulated bank because I believed it would protect the students who trusted us,” Gray told TechCrunch. “Instead, I watched the company build a non-bank subsidiary to do things the bank itself can’t legally do: sell student data. That’s not the company I thought I was joining.”

Sallie Mae denied Gray’s allegations, calling them “without merit” and declined to answer TechCrunch’s questions about its data privacy practices.

“While we don’t comment on pending litigation, it’s unfortunate a former employee is making false accusations about our company following his departure nearly two years ago. We plan to vigorously defend ourselves against these claims which are without merit or substance,” Rick Castellano, the company’s vice president of corporate communications, said in an email.

Asked which specific accusations were “false,” Castellano declined to comment.

From Alabama to Shark Tank

Gray grew up low-income in Birmingham, Alabama, with a single mother and two siblings. He felt the barriers to higher education were “real and immediate” for someone like him.

Aside from being expensive, he felt he lacked access to information to help him make proper decisions about where to go and how to afford it, a pressure that only compounded after his mother lost her job in the 2008 recession.

“That experience shaped how I thought about the scholarship system later,” he recalled, saying he began to view education and scholarship as “a problem of access rather than a problem of merit.”

As a teenager, when the time came for him to apply for scholarships, he found the process fragmented and inefficient, he said. There was no centralized search for him to find opportunities, and when he did find a website with scholarship options, there were thousands of listings, but no reliable way to filter to see what he was actually eligible for. Not to mention the scams and outdated listings tha

Founder of Shark Tank-backed startup Scholly sues his acquirer Sallie Mae