A payments firm run by the founder of Twitter saw its share price plunge after a notorious short seller accused the company of fraud.
Block, which is led by Jack Dorsey, tumbled 15 per cent on Wall Street after New York-based Hindenburg Research alleged the company overstated its user numbers while also underestimating the cost of acquiring customers.
In a wide-ranging report following a two-year investigation, Hindenburg said former Block employees had estimated 40 per cent to 75 per cent of accounts they reviewed were fake, linked to fraud, or were multiple accounts tied to one person.
Shorted: Block, which is led by Jack Dorsey (pictured), was accused of overstating its user numbers while also underestimating the cost of acquiring customers
Hindenberg also claimed Block had been willing to ‘facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors’.
The short seller also alleged Block took a ‘wild west’ approach to compliance which had made it a popular avenue for criminals to transfer money.
Block owns Cash App, a mobile payments service popular in the US, estimated to have over 50m monthly active users.
A Block spokesman said they intended to ‘explore legal action against Hindenburg Research for the factually inaccurate and misleading report ’, adding : ‘Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price.’
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