Hindenburg Research, a company that made waves in January for betting against Adani Group, claimed in a new report that Block allowed users to transact through the Cash App for illegal activities and helped facilitate fraud related to covid-19 relief .
“Former employees described how Cash App suppressed internal concerns and ignored user requests for help while criminal activity and fraud were rampant on its platform,” the report claims.
Hindenburg also said it took a short position on Block, meaning it is betting against the company’s share price.
Block, founded by Twitter founder Jack Dorsey, did not immediately respond to a request for comment. The stock fell by as much as 19 percent on Thursday morning.
In January, Hindenburg took a short position in Adani Group, an Indian conglomerate owned by one of Asia’s richest men. At that time, Hindenburg released a report accusing Adani of artificially inflating the share price using a network of foreign shell companies. Adani denied the allegations, but it shared with the release and months later the company remains in trouble.
Hindenburg also made waves in 2020, when shares of electric vehicle maker Nikola collapsed after it was accused of misrepresenting its technology. Hindenburg took a short position on Nikola and investigations from the Justice Department and securities regulators followed. Nikola’s founder was later convicted of fraud.
Hindenburg was founded by Nate Anderson, an activist short seller who has quickly risen to prominence in recent years. Activist short sellers are controversial: some see them as unsavory actors because their success depends on a company’s failure. But others say they are key actors driven by high financial rewards to expose corporate fraud.
This is a breaking story and will be updated.