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Jack Dorsey’s Block latest under scrutiny from Hindenburg Research

Hindenburg Research, the company that forced the Adani empire onto its knees amid allegations of stock manipulation, has taken aim at and disclosed short positions in Block, alleging that the payments firm led by Jack Dorsey overstated its user numbers and understated its customer acquisition costs.

Block under scrutiny from Hindenburg Research

Block vowed to fight back, saying it would explore legal action against the short seller for its “factually inaccurate and misleading report” that was “designed to deceive and confuse investors”.

Hindenburg Research, as well as accusing Block of artificially inflating its user numbers says it is also facilitating fraudulent transactions.

In a statement, Hindenburg said it had been investigating Block for two years and had taken a short position in the shares. It said the accusations were based on “dozens of interviews with former employees, partners, and industry experts, extensive review of regulatory and litigation records” as well as Freedom of Information Act requests and “public records requests”.

Block’s two primary businesses are its Square payments services and its Cash App mobile payments product, which competes with rivals such as Venmo and Zelle.

Hindenburg alleged Block “obfuscates” the actual number of people on its Cash App platform by reporting “misleading . . . metrics filled with fake and duplicate accounts”.

Block said it would work with the Securities and Exchange Commission to explore legal action against Hindenburg “for the factually inaccurate and misleading report” about its Cash App business.

“We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors,” the company said.

Block’s shares were down more than 14%. The company had a market capitalisation of nearly $44 billion.

Hindenburg first came to prominence in 2020 when it claimed truck start-up Nikola’s business was a fraud.

Earlier this year, it accused Indian billionaire Gautam Adani, at the time the third-richest person in the world, of “pulling the largest con in corporate history”.

With regards to the overstated genuine user accounts and the understating of the amount it costs to attract new customers, Hindenburg cited “former employees” as estimating that 40 to 75% of accounts they reviewed were fake, involved in fraud or were users holding multiple accounts.

Hindenburg said that in investigating the matter, it had opened several accounts under fake names including “Donald Trump” and “Elon Musk”. The report further alleges Block has no obvious advantage over competitors such as Venmo or Zelle.


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