Hindenburg report knocks off $526 million from Jack Dorsey’s wealth

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US investment group Hindenburg Research’s latest report targeting payments firm Block has led to co-founder Jack Dorsey losing over $500 million. Dorsey’s mobile payments firm has been accused of “widely overstating” its user base in the report. Block’s stock tumbled up to 22 per cent in early trading on Wall Street before recovering slightly following the release of the report.

Hindenburg report said Block had taken short positions in the stock and misled investors. While the report caused a drop in Block’s market capitalisation, Dorsey’s personal wealth also saw a massive dip. His net worth plunged by $526 million on Thursday, the worst single-day decline in his fortunes since May.

According to the Bloomberg Billionaires Index, his net worth saw an 11 per cent drop and now stands at around $4.4 billion. 

Hindenburg said that the California-based company knew that many of its accounts were fraudulent or belonged to the same user. However, it failed to account for this in its financial disclosure. 

The report accused Block of taking an approach that “made it easy for bad actors to mass-create accounts for identity fraud and other scams, then extract stolen funds quickly.”

The Hindenburg report further said that it investigated Block for two years and interviewed dozens of former employees and experts. It also analysed documents from regulators and court proceedings before preparing the report. 

Block was founded by former Twitter boss Dorsey in 2009 and was initially known as Square. It was renamed in late 2021. The tech company operates financial transactions, ranging from payments to merchants to payments between individuals. 

Block owns the mobile app Cash App. It has registered staggering growth and surpassed $100 billion in market value in 2021. It is currently worth $38 billion.

(With inputs from agencies)

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