Hindenburg Research, which previously targeted India‘s Adani Group, has recently published its first report on Jack Dorsey’s Block Inc. This report has caused a significant drop of 14.8% in the value of Block (SQ), the fintech payments company, due to being the subject of Hindenburg’s latest criticism. Following the market opening, shares of Block Inc. were observed to be trading at $61.88 at press time.
Hindenburg Research mentioned in its report: “Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping.”
The report also mentioned that Block’s business is not a disruptive innovation but rather the willingness of the firm to foster fraudulent activities against the government and consumers.
Hindenburg Research report stated that the conclusion is after dozens of interviews with partners, ex-employees, and industry experts. The report also takes a shot at Block’s Cash App, stating that it is strongly linked to numerous crimes.
According to the report, Block Inc. has significantly overstated its actual number of users and understated the expenses incurred for customer acquisition. Based on the accounts reviewed by former employees, it is estimated that between 40% to 75% of these accounts were fraudulent, involved in deceitful activities, or were linked to a single user’s multiple accounts.
In response to Hindenburg Research’s report, the company has claimed that it is “factually inaccurate and misleading” and has expressed its intention to pursue legal action. Block stated, “We intend to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today.”
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Source: Cryptocurrency - investing.com
