Jack Dorsey News: Block Inc, the payment and mobile banking services company co-founded by Jack Dorsey, has been accused of allowing fraudulent accounts to proliferate on its Cash App platform by Hindenburg Research. In a report released on Thursday, the short-seller alleged that the company generated illegitimate revenue and exaggerated user metrics by dressing up predatory loans and facilitating fraud against consumers and the government, misleading investors with inflated metrics and avoiding regulation. The report claimed that the “magic” behind Block’s business was not disruptive innovation, as is widely believed, but rather these fraudulent practices.
The allegations had an immediate impact on Dorsey’s net worth, which plunged by $526 million, his worst single-day decline since May, according to the Bloomberg Billionaires Index. After the 11 percent drop, he is now worth $4.4 billion. Block's stock fell as much as 22 percent on Thursday before closing down 15 percent.
ALSO READ: Adani row: Supreme Court sets up expert committee on issue arising out of Hindenburg report
Although the report claimed that Block's stock has a downside of 65% to 75% "on a purely fundamental basis," the company denied the allegations and announced its intention to pursue legal action against Hindenburg.
According to the Bloomberg wealth index, Jack Dorsey, the co-founder of Twitter, has a significant portion of his personal wealth invested in Block, with his stake in the company valued at approximately $3 billion.
ALSO READ: 'Truth will prevail...' Adani reacts to SC's order to set up 6-member committee on Hindenburg Research report
Nathan Anderson's Hindenburg Research has a track record of targeting billionaires and causing their fortunes to decline. In a recent investigation by Hindenburg Research, India's Gautam Adani and his companies were accused of fraudulent activities, causing a significant drop in their stock prices and erasing billions from Adani's net worth. The report led to Adani's demotion from the second-richest person to 21st place on Bloomberg's wealth index, with a current fortune of $60.1 billion. The same short-seller also targeted electric carmaker Nikola Corp in September 2020, which resulted in the fraud conviction of its founder, Trevor Milton.
Latest Business News
