Jack Dorsey’s bloc faces Hindenburg’s wrath

The Block (SQ) share price fell 18% following the publication of an investigation by short selling firm Hindenburg Research.

Hindenburg acquired payment service providers Block Inc. Has claimed to have investigated for the last two years and released a report today. It alleges that the block inflated user metrics and that insiders sold the top.

Criminals Use Block’s Cash App

According to the firm’s annual report for 2022, they have 51 million monthly “active users”. But, formal employees told Hindenburg that 40 to 75% of accounts on Cash App are fake, involved in fraud, or are accounts in addition to existing users.

They claim that the Cash App is open to criminals. “Every criminal has a Square Cash App account,” says one employee.

Hindenburg claims pressure from top management has led to its flouting of Anti-Money Laundering (AML) and Know Your Customer (KYC) laws.

The Block’s Cash app enables account creation with a phone number or email address.

Donald Trump Visa Cash App Card

Hindenburg claims that it is easy for wrongdoers to impersonate celebrities using the Cash App. He created two accounts named Donald Trump and Elon Musk and exchanged funds between these two accounts.

He also ordered a Cash App Visa card in June 2022 in the name of “Donald J. Trump” to test compliance with the block.

Block gives Donald Trump card to Hindenburg analyst
Source: Hindenburg Report

In addition, Hindenburg claims that insiders, including CEO Jack Dorsey, sold over $1 billion worth of stock. “In general, Block insiders increasing the size and volume of their sales at the right time as the stock moves higher in early 2021,” the report said.

Source: Hindenburg Report

Hindenburg Research has a short position on shares of Block Inc. Following the report, the stock opened down 18% from $72.66 to $60. However, as of writing, it is trading at $63.05, up almost 5% from its opening price.

The Block has yet to comment on the claims.

Source: TradingView

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BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.

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