Jack Dorsey’s fortunes plummet by $526 million after Hindenburg’s report on Block Inc

Co-founder of Block Inc, Jack Dorsey’s fortunes plummeted a day after Hindenburg Research released a report on the payments company. Dorsey’s fortunes plunged by $526 million, and is now worth $4.4 billion, according to Bloomberg Billionaires Index. The 11 per cent drop in his fortunes was his worst single-day decline since May. 

The US-based short-seller, backed by Nathan Anderson, that had released a damning report on Adani Group in January, said that Block took advantage of the demographic it claimed to be helping. It accused that the company was willing 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”. 

It accused Block and said that it “wildly overstated” the user count on Cash App and understated its acquisition costs.

Block claimed to be helping the “underbanked” but the only people it helped are the ‘criminals’, said Hindenburg. Its approach helped bad actors to mass-create accounts for identity fraud and other scams and extract stolen funds quickly. 

Hindenburg also accused Block of obfuscating how many users are on the Cash App by reporting misleading metrics, filled with fake and duplicate accounts. The report also quoted Jack Dorsey, publicly touting how Cash App is mentioned in hundreds of hip hop songs. Hindenburg said that these songs are not rapping about Cash App’s smooth interface but describing using it for scams, trafficking drugs and murder. 

The app is the top choice, used for sex trafficking, said Hindenburg, citing a non-profit organisation. 

CEO Jack Dorsey had tweeted during the pandemic that Cash App could get government payments “immediately” with “no bank account needed” due to its frictionless technology. Within weeks, “Washington State wanted more than $200 million back from payment processors while Arizona sought to recover $500 million”, said the report quoting employees.

“Block regularly hypes other mundane or predatory sources of revenue as technological breakthroughs,” stated the report. 

Block trashed the charges and said it was exploring legal action against Hindenburg. It called the report on Cash App "factually inaccurate and misleading". Block said that the report was "designed to deceive and confuse investors".

Also read: Hindenburg Research shorts Jack Dorsey's payments firm Block

Also read: What is Block, Cash App and what are Hindenburg's accusations against Jack Dorsey?