Ashish Ranjan
In its most recent report, the short-seller Hindenburg Research accused Twitter co-founder Jack Dorsey’s payment company Block (formerly Square Inc.) of “facilitating fraud against consumers and government, avoiding regulation, dressing up predatory loans, and misleading investors.” The shares of Block plummet by more than 18% after short-seller Hindenburg Research disclosed the payment company as its latest short position.
“After a 2-year investigation, we have determined that Block has systematically exploited the demographics it purports to assist. 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, disguise predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics, according to the most recent report from Hindenburg Research.
NEW FROM US:
Block—How Inflated User Metrics and "Frictionless" Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billionhttps://t.co/pScGE5QMnX $SQ
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— Hindenburg Research (@HindenburgRes) March 23, 2023
The report added that “even when users were caught engaging in fraud or other prohibited activity, Block did not ban the user but instead blacklisted their account.” According to the report, a former customer service representative shared photographs demonstrating how blacklisted accounts were frequently linked to dozens or hundreds of other active accounts suspected of fraud.
According to the report, Block’s Cash App flourished by catering to “unbanked” customers. It is also alleged that these unbanked consumers participated in illegal or criminal activity.
What is Jack Dorsey’s block?
Jack Dorsey, co-founder of Twitter, founded the payment company Square in 2009 with a disruptive idea: a tiny card reader that could plug into a smartphone’s headphone jack to facilitate easy credit card transactions between payers and vendors.
“A month after PayPal acquired Venmo in 2013, Block launched Square Cash, later rebranded as Cash App. It intended to compete with Venmo by offering financial services to consumers, beginning with a peer-to-peer mobile app through which users could send and receive money, according to the report.
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“In 2017, Block expanded into more traditional banking by introducing the Cash Card, a prepaid debit card that enables users to conduct transactions outside of their Cash App wallet. In 2018, following bitcoin’s price and popularity surge, Cash App enabled users to convert Cash App wallet funds into Bitcoin,” the company said.
