Former Twitter CEO and Block Inc. co-founder Jack Dorsey’s net worth dropped by $526 million dollars after a notorious short-seller, Hindenburg Research, released a report accusing the firm of misleading investors and embracing a criminal user base.
The report claims Block had inflated user metrics, and that the stock has a downside of 65% to 75% “on a purely fundamental basis.”
Block fell as much as 22% on Thursday, before closing down 15%.
Block, the payment company formerly known as Square, also owns the popular smartphone payment application Cash App.
The Daily Mail reported:
Hindenburg Research on Thursday disclosed its short position in Block and released findings from a two-year investigation, alleging the company ‘misled investors on key metrics, and embraced predatory offerings and compliance worst-practices in order to fuel growth.’
Shares of Block plunged nearly 15 percent on the day, and Dorsey’s net worth took a $562 million hit, dropping 11 percent to $4.4 billion, according to the Bloomberg Billionaires Index.
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The latest Hindenburg report includes expansive allegations against Block, the payments company formerly known as Square, which also owns the popular smartphone payment application Cash App.
Many of Hindenburg’s claims center on alleged rampant criminal use of Cash App for drug deals, sex trafficking, and even murder-for-hire.
The report cited rapper 22Gz, who boasted in lyrics of his 2020 song Cash App: ‘I paid them hitters through Cash App.’ Hindenburg noted that Block sponsored a giveaway to promote the music video for the song.
Last June, 22Gz, whose real name is Jeffrey Mark Alexander, was arrested on charges of attempted murder in New York City. That case remains pending.
Hindenburg cited a bevy of rappers who openly boast of using Cash App for criminal purposes in their songs, as well as real-world evidence that the payment app is used in criminal schemes, including government benefits fraud.
In once case, rapper Nuke Bizzle, was convicted for committing COVID stimulus fraud, using Cash App as the payment mechanism. He was arrested just weeks after boasting about the scheme in his lyrics.
‘Block has embraced one traditionally very “underbanked” segment of the population: criminals,’ Hindenburg wrote in the report.
Dorsey also had a problem with criminal infiltration on Twitter, primarily in the form of child exploitation material. The problem was so prevalent that Elon Musk tweeted that removing child exploitation was priority #1 when he purchased the company.
