Stocks on Jack Dorsey’s company Block have plunged by more than 20% after short seller Hindenburg Research put out a claim that the said company has been engaged in criminal activities through its Cash App platform. Hindenburg Research challenged the company which was previously known as Square for its user metric which was reportedly inflated as well as some suspected predatory ploys.
According to the research report “willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as a revolutionary technology, and mislead investors with inflated metrics.”
Additionally, “CEO Dorsey has touted how Cash App is in hundreds of hip hop songs as evidence of its appeal,” the report says. “But artists are not rapping about Cash App’s smooth user interface — many describe using it to scam, traffic drugs or even pay for murder.”
Noteworthy, this Hindenburg research for Block Inc. has been ongoing for up to two years now and this is not the first time such a report is coming up. Indian conglomerate Adani Group suffered a similar fate for taking up to $100 billion from the company value. Three years ago, EV maker Nikola (NKLA) was also called out by Hindenburg for launching prototypes and misleading users to believe that these vehicles were driving themselves.
Block Responds to Hindenburg Report
These are only a few among other nefarious behaviors at the company, according to Hindenburg. Block has responded to the research report, saying;
“We intend to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today. Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price. We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors.
We are a highly regulated public company with regular disclosures, and are confident in our products, reporting compliance programs, and controls. We will not be distracted by typical short seller tactics.”
Before all of these, Jack Dorsey’s Block was awaiting feedback on its potential Bitcoin (BTC) “mining development kit”.
