Narendra Razdan, the grandfather of Alia Bhatt, is in critical condition due to a worsening lung infection.
After Adani, Hindenburg now alleges Jack Dorsey's firm Block engaged in fraud
New York: Hindenburg Research has put out a report against Jack Dorsey-backed payments firm Block Inc., formerly known as Square Inc, saying a two-year investigation into the company concluded that it has "systematically taken advantage" of the demographics it claims to be helping.
Jack Dorsey, the former head of Twitter, is co-founder and CEO of Block. "The magic behind $SQ (Block) has not been innovation, but its willingness to mislead investors, facilitate fraud, avoid regulation and dress up predatory products as revolutionary tech," Hindenburg alleged in the report, published on Thursday.
The Hindenburg report claimed its research involved dozens of interviews with former employees, partners, and industry experts, and an extensive review of regulatory and litigation records, among others.
The report also claimed Block "wildly overstated" genuine user counts and "understated" customer acquisition costs for years.
"Former employees evidenced that many users have dozens, or even hundreds of accounts associated with them, vastly inflating user metrics," the report claimed.
"Most analysts are excited about the post-pandemic surge of Block's Cash App platform, with expectations that its 51 million monthly transacting active users and low customer acquisition costs will drive high margin growth and serve as a future platform to offer new products."
Further, Block, according to the report, obfuscated how many unique individuals use Cash App, reporting misleading metrics on "transacting actives" which include duplicate accounts by the same user. Former employees, it claimed, estimated that 40-75 per cent of accounts they reviewed were fake, involved in fraud, or duplicates.
Block shares slumped sharply after the allegations were levelled against it.
Block reportedly said the Hindenburg report was "factually inaccurate and misleading" and threatened to "explore legal action" against the short seller.
The latest report by the US-based short seller firm comes about two months after it raised concerns about shares of Adani group companies having a possibility of declining from their current levels, owing to high valuations, and alleged stock manipulation and accounting fraud. Following the report, the Adani group companies' shares declined sharply, though with varying degrees, and lost value of over USD 100 billion. The continued sell-offs in the group's stocks led its flagship firm, Adani Enterprises Limited, to cancel a fully subscribed Rs 20,000 crore follow-on public offer.
Adani Group responded by saying that the report by Hindenburg Research was not an attack on any specific company but a "calculated attack" on India, its growth story, and ambitions.
Also, in its response to the Hindenburg Research, the Adani Group has attacked Hindenburg as "an unethical short seller". It added the report was "nothing but a lie". Adani Group, in its 413-page report, also responded to all 88 questions raised by Hindenburg in detail.
A short seller in the securities market books gains from the subsequent reduction in the prices of shares. (ANI)