Hindenburg's next target is Jack Dorsey's payment app's firm, Block

Hindenburg Research, the American research firm said in its report on Thursday that Jack Dorsey's Block has "systematically taken advantage of the demographics it claims to be helping". Thereport pushed Block shares to plunge 20%.

US-based short seller Hindenburg Researchwhich made headlines earlier this year for its report accusing the Adani Group,which caused a widespread stock market sell-off and price drop,released its latest critical report on US-based mobile payment provider Block, led by Twitter co-founder Jack Dorsey.

The report added that "Block Inc., formerly known as Square Inc., is a $44 billion market cap company that claims to have developed a 'frictionless' and 'magical' financial technology with a mission to empower the 'unbanked' and the 'underbanked'".

Add WION as a Preferred Source

However, Hindenburg said, "Our 2-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".

Most analysts were optimistic about Block's Cash App platform after the recent post-pandemic uptick, according to Hindenburg.

However, according to the research firm, Block has also "wildly oversated" the number of its actual users and significantly underestimated the amount it has spent on acquiring those users.

According to the US short seller's investigation, between 40% and 75% of the accounts looked at by former employees were either fake or duplicates of accounts already owned by the same person.

Hindenburg also said that Block lied about how many users it had and how much money it made by counting fake accounts and payments as real users and money. According to the article, Block's shares increased by 639% in 18 months during the pandemic, thanks to the new company.

That comes hours after the US research firm said that a new report is coming out soon."New report soon—another big one," Hidenberg tweeted earlier on Thursday, March 23, but did not give any further details.

Hindenburg's report from January 24 had said that the Adani Group had committed fraud and messed with taxes. The report also said that the Adani Group had unsustainable debt. The conglomerate denied the allegations, saying it complied with all laws and has made necessary disclosures over time.

In India, the opposition Congress accused the Bharatiya Janata Party (BJP)-led central government of favouring the Adani Group.

Adani Group's stock lost more than $145 billion in market value at one point after the report was published. However, since those deep losses, the shares of the Indian business group's firms have recovered sharply but they are still in the red compared to trades before the US short seller's report two months ago.

Hindenburg's tweet of "another big one" comes when the United States is in the midst of a banking crisis.

The recent failures of American banks and the 167-year-old Swiss bank Credit Suisse have weighed heavily on financial markets, wiping out billions of dollars.After the Silicon Valley Bank failed, people on Twitter said that Hindenburg was biased and pointed out that the research firm had been quiet about the failure of major US banks.

For now, the only connection to the latest Hindenburg report is that it accuses the former CEO of Twitter.

(With inputs from agencies)

WATCH WION LIVE HERE

You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here.