Isn't this a fairly common practice? Admittedly, Groupon's enormous employee base means they're going to burn through the remaining funds faster than an ordinary startup. Aside from that, this doesn't seem all that outrageous, at least not outrageous enough for the overall level of indignation in the comments here (accusations of it being a pyramid scheme, etc.).
I don't think it's that common for equity to be massively cashed out (to the tune of nearly $1b) before the IPO. Shows a pretty strong lack of confidence in not only the long-term viability of the business, but even its medium-term viability, or else the principals would be content with the normal practice of slowly cashing out with steady monthly post-IPO stock sales. As far as I can find, Google principals didn't significantly cash out before their IPO.
That's certainly why I'm surprised about it. Don't transactions of this size have to be okayed by the board of directors? And by series G shouldn't the original founders and early investors be diluted out of board control? Perhaps Groupon is special, I'm not familiar with these things.
