After Adani, Hindenburg Targets Jack Dorsey's Block

Block, the Jack Dorsey-founded fintech formerly known as Square, is in trouble after falling within the crosshairs of notorious short-seller Hindenburg Research, which battered the Indian billionaire Gautam Adani’s businesses, Data Sheet reported.

Photo Insert: Hindenburg has thrown a number of accusations Block's way, all of which are related to business ethics violations.

Hindenburg is one short-seller that performs deep research into companies it thinks are overhyped or dabbling in fraud and takes a short position on its target’s stock before publishing its findings.

Before Adani, Hindenburg also targeted hydrogen-powered truck outfit Nikola and the health-tech startup Clover Health.

Now Hindenburg has turned its attention to Dorsey’s Block, shares which dropped as much as 22% on the report’s release, before partially recovering. Hindenburg said it had been investigating Block for two years.

It accused Block of misleading investors by overstating its genuine user counts, failing to ban fraudsters from using its platform, acting as a regular conduit for fraudulent COVID payments due to lax compliance, allowing its Cash App platform to be used for paying contract killers, drug dealers, and sex traffickers, and suppressing internal concerns about this.

“The ethics of outfits like Hindenburg are certainly up for debate, and these Block allegations are yet to be proven, but the short-seller has a good reputation for doing its homework. For Silicon Valley, this is Hindenburg’s biggest hit yet, and it could prove explosive,” Data Sheet concluded.

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