Business

Jack Dorsey’s wealth tumbles $526 million after Hindenburg’s report on Block Inc

The short seller has alleged that Block has allowed fraudulent accounts to proliferate on cash applications, generating illegitimate revenue and exaggerating user metrics

PGurus Newsdesk

March 24, 2023

The short seller has alleged that Block has allowed fraudulent accounts to proliferate on cash applications, generating illegitimate revenue and exaggerating user metrics

Hindenburg Research’s latest report targets Jack Dorsey’s Block

Two months after accusing Adani Group of fraud, US-based short seller Hindenburg Research launched a new salvo, this time against former Twitter co-founder and CEO Jack Dorsey‘s mobile payments firm Block Inc, saying it “widely overstated” its user base. The report caused Dorsey to be left poorer by $526 million.

After his worst single-day decline, Dorsey is now worth $4.4 billion, according to Bloomberg Billionaires Index.

Block’s shares also nosedived as much as 22 percent on Thursday, before closing down 15 percent late on Thursday.

Block, formerly known as Square, claims to have developed a “frictionless” and “magical” financial technology with a mission to empower the “unbanked” and the “underbanked”.

“Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping,” said Hindenburg Research in its report, taking its latest short position on Block.

“We also believe Jack Dorsey has built an empire — and amassed a $5 billion personal fortune — professing to care deeply about the demographics he is taking advantage of,” it added.

Block or Dorsey were yet to react to the Hindenburg report.

According to the report, Block embraced a traditionally “underbanked” population segment: criminals.

“The company’s ‘Wild West‘ approach to compliance made it easy for bad actors to mass-create accounts for identity fraud and other scams, then extract stolen funds quickly,” the report mentioned.

In sum, “we think Block has misled investors on key metrics and embraced predatory offerings and compliance worst-practices in order to fuel growth and profit from facilitation of fraud against consumers and the government,” said Hindenburg.

[With Inputs from IANS]

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