Hindenburg Alleges Fraud By Payments Company Block, Names Indian-Origin CFO

The US-based short seller that had levelled allegations of money laundering against Adani Group is back at it.

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Digital payments company Block has been accused of misleading investors in a report put out by Hindenburg Research on Thursday, 23 March.

Driving the news: The short-seller said that it's betting on a decline in Block's share prices.

• The report against Block was the result of a two-year-long investigation led by Hindenburg's founder Nathan Anderson.

• It also mentions Indian-origin Amrita Ahuja, who holds the position of Chief Financial Officer in Block.

• Ahuja has previously worked in companies like Morgan Stanley, McKinsey & Company, Fox Networks Group, etc.

• She joined Block in 2019 as Chief Financial Officer, and became its Chief Operating Officer in February this year. 

In a nutshell: Hindenburg broadly accused Block of a willingness to "facilitate fraud, avoid regulation & dress up predatory products as revolutionary tech."

• The company "overstated genuine user counts and understated customer acquisition costs for years," Hindenburg alleged

• Cash App, a peer-to-peer (P2P) payment app owned by Block, is allegedly rampant with "criminal activity and fraud."

• It also alleges that Ahuja dumped millions of dollars in stocks during the pandemic

• Twitter co-founder Jack Dorsey is the chairman of Block

• The company was established in 2009 to offer payment and mobile banking services for merchants and consumers

Why it matters: Shares of Block slumped by 20 percent to $58.35 in New York in US pre-market trading, according to Bloomberg.

Flashback: In January, Hindenburg Research had accused Adani Group of carrying out an elaborate "con".

• The billion-dollar conglomerate was accused of stock market manipulation and money laundering

• Five trading days later, Gautam Adani's net worth had reduced by nearly $70 billion

• The report had also led to the withdrawal of Adani Enterprises' Rs 20,000-crore FPO