Hindenburg Research targets Jack Dorsey's Block Inc, claims insider fraud

Hindenburg Research on Thursday accused Twitter founder Jack Dorsey's company Block of "frictionless" fraud that inflated user metrics, and enabled insiders to cash out over $1billion. The "magic" behind Block's business has not been disruptive innovation, according to a two-year investigation by a US-based shortseller, but rather the company's willingness to facilitate fraud against consumers and the government, avoid regulation, disguise predatory loans and fees as ground-breaking technology, and deceive investors with inflated metrics.

According to Hindenburg Research, "Block has greatly inflated real user counts and understated its client acquisition expenditures."

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"Block has repeatedly abused the demographics it purports to be assisting, according to our two-year research," the short seller wrote in a message posted on its website.

"Beyond facilitating payments for criminal activity, the platform has been overrun with scam accounts and fake users, according to numerous interviews with former employees," the Hindenburg report added. Shares of Block fell 13% in premarket trading after the report.

The US short seller’s report comes two months after its explosive allegations against Adani Group wiped more than $100 billion off the conglomerate’s market value.

Hindenburg Research is a forensic financial research company that examines equities, credit, and derivatives. It was founded in 2017 by Nathan Anderson. It has a history of exposing corporate misconduct and betting against the corporations.

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