Twitter founder Jack Dorsey’s payments firm attacked by short-seller
Twitter founder Dorsey attacked by short seller: Payment firm Block drops 15% after being accused of fraud
A payments company led by the founder of Twitter saw its share price plummet after a notorious short seller accused the company of fraud.
Block, led by Jack Dorsey, plummeted 15 percent on Wall Street after New York-based Hindenburg Research claimed the company overestimated its user numbers while underestimating the cost of acquiring customers.
In a comprehensive report following a two-year investigation, Hindenburg said former Block employees estimated that 40 to 75 percent of the accounts they reviewed were fake, linked to fraud, or multiple accounts linked to one person.
Shorted: Block, which is led by Jack Dorsey (pictured), was accused of overestimating the number of users and underestimating the cost of acquiring customers
Hindenberg also claimed that Block had been willing to “facilitate fraud against consumers and the government, avoid regulation, dress up predatory lending and fees as revolutionary technology, and mislead investors.”
The short seller also alleged that Block took a “wild west” approach to compliance, which had made it a popular way for criminals to transfer money.
Block owns Cash App, a mobile payment service popular in the US estimated to have over 50 million monthly active users.
A spokesperson for Block said they intend to “investigate legal action against Hindenburg Research over its factually inaccurate and misleading report,” adding: “Hindenburg is known for these kinds of attacks, which are designed solely to trick short sellers into benefit from a falling share price. .’