Yet again Hindenburg Research’s new revelation has shocked the cryptocurrency market. According to a report published on Thursday by the investment research firm, Jack Dorsey’s digital payments startup Block has engaged in a massive fraud. After the Adani fiasco, it has now published a report alleging that Block Inc. has knowingly assisted fraud against customers and governments. 

Block, formerly known as Square, 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”. $SQ

(2/n) pic.twitter.com/NmL0f2MzgW

— Hindenburg Research (@HindenburgRes) March 23, 2023

Block was established in 2009 by Jim McKelvey and Dorsey. From November 2015, it has been traded as a public corporation on the New York Stock Exchange (NYSE) under the ticker code SQ.

Hindenburg, in its blog 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.”

The share price of Block decreased 20% after the report’s release, reaching $57.85 in premarket trading. Market analysts predict a further loss of 40–50% over the next few days if Block is unable to make any convincing defenses against the allegations.  It will be interesting to see how Block shares respond to this new report from Hindenburg, especially in light of how severely Adani shares were impacted following the Hindenburg report.

Allegations against Cash App

Hindenburg Research claims that Cash App, which was co-founded by Dorsey, rejected warnings from the Secret Service, the US Department of Labor, and many state agencies, as well as internal employee concerns.

The report asserted that the Cash app is often used for illegal purposes by citing the nonprofit Polaris Project. These allegations have been refuted by Cash App, which also said that it rejects any payments connected to illegal activity.

“There are dozens of ‘Elon Musk’ and ‘Donald Trump’ fake accounts as well. A search for Cash App account holders with the name “Jack Dorsey” turns up numerous accounts, including a number with “cash tags” that could be used to mislead and scam other users,” the report said.

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