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Business News/ News / World/  Jack Dorsey’s wealth tumbles $526 mn after Hindenburg accuses Block of fraud, misleading investors
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Jack Dorsey’s wealth tumbles $526 mn after Hindenburg accuses Block of fraud, misleading investors

Block offers payment and mobile banking services for merchants and consumers.

Twitter Files: Jack Dorsey has taken up the responsibility for controversial content decisions that the company made under his leadership. (AFP)Premium
Twitter Files: Jack Dorsey has taken up the responsibility for controversial content decisions that the company made under his leadership. (AFP)

After Hindenburg's latest report on Jack Dorsey's Block Inc, net worth of the co-founder was hammered. The report alleged that the payments company ignored widespread fraud. According to the Bloomberg Billionaires Index, Dorsey’s fortune plunged by $526 million on Thursday, his worst single-day decline since May. He’s now worth $4.4 billion after the 11 percent drop. 

Hindenburg's report claimed that Block has allowed fraudulent accounts to proliferate on cash applications, generating illegitimate revenue and exaggerating user metrics.

Block offers payment and mobile banking services for merchants and consumers.

The Nathan Anderson-backed research firm shed great limelight on Block's CASH App platform. According to them, Block's climb to stardom comes due adoption of the Cash App. The short seller's report said, "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."

Hindenburg released a report claiming Block had inflated user metrics, and that the stock has downside of 65 percent to 75 percent “on a purely fundamental basis." The company denied the allegations and said it plans to explore legal action against the short-seller.

Block fell as much as 22 percent on Thursday, before closing down 15 percent.

Dorsey, who also co-founded Twitter, has most of his personal fortune tied up in Block. The Bloomberg wealth index estimates his stake in the firm is worth $3 billion, while his position in Elon Musk’s social media company is valued at $388 million. 

It’s not the first time that Hindenburg, run by Nathan Anderson, has singled out billionaires and sent their fortunes falling. 

The firm released an investigation into India’s Gautam Adani and his empire earlier this year, causing his companies’ stocks to plummet and erasing tens of billions of dollars from his net worth. 

Adani, who at one point was the world’s second-richest person, now ranks 21st on Bloomberg’s wealth index with a $60.1 billion fortune.

Hindenburg also targeted electric carmaker Nikola Corp. in September 2020. Nikola’s stock plunged in the aftermath and an investigation led to a fraud conviction against its founder Trevor Milton in October. 

(With inputs from Bloomberg)

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Published: 24 Mar 2023, 05:37 AM IST
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