After Adani Group, Hindenburg Tragets Jack Dorsey’s Block

New York: Months after targeting the Adani Group, US short-seller Hindenburg Research on Thursday accused Twitter founder Jack Dorsey-led payments firm Block Inc of “overstating its user counts and understating its customer acquisition costs”.

It said former Block employees estimated that 40%-75% of accounts they reviewed were fake.

Hindenburg Research said its two-year investigation on Dorsey’s Block “revealed the company’s willingness to facilitate fraud against consumers and the government”.

Hindenburg said as Block’s stock soared on the back of its facilitation of fraud, co-founders Jack Dorsey and James McKelvey collectively sold over $1 billion of stock during the pandemic. “Other executives, including CFO Amrita Ahuja and the lead manager for Cash App Brian Grassadonia, also dumped millions of dollars in stock,” the Hindenburg report said.

The US short-seller firm said it held short positions in Jack Dorsey’s Block Inc. Block Inc, formerly known as Square Inc, is a company with a $44-billion market capitalisation.

Block share price declined 20% to $58.35 at 8:53 am in New York in US premarket trading, according to a Bloomberg News report.

“Our two-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping. The ‘magic’ behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics,” Hindenburg said.