Jack Dorsey is most famous for being the co-founder of social networking platform, Twitter. Dorsey reportedly has most of his personal fortune tied up in Block. As per the the Bloomberg wealth index, his stake in the firm is worth $3 billion, while his position in Elon Musk’s social media company is valued at $388 million
New Delhi: The net worth of the co-founder of Block Inc., Jack Dorsey, was hammered after the latest report Hindenburg Research accusing the payments company of ignored widespread fraud. Dorsey’s fortune plunged by $526 million on Thursday, his worst single-day decline since May, according to the Bloomberg Billionaires Index. He’s now worth $4.4 billion after the 11 per cent drop.
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The report titled “Block: How Inflated User Metrics and “Frictionless” Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billion” by the New York-based short seller claimed that Block has allowed fraudulent accounts to proliferate on cash applications, generating illegitimate revenue and exaggerating user metrics.
Block offers payment and mobile banking services for merchants and consumers.
As per Hindenburg Research, Block’s climb to stardom comes due adoption of the Cash App. The short seller’s report said, “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.”
As per the Hindenburg report, Block had inflated user metrics, and that the stock has downside of 65 percent to 75 percent “on a purely fundamental basis.” The company denied the allegations and said it plans to explore legal action against the short-seller.
Block fell as much as 22 percent on Thursday, before closing down 15 percent.
Jack Dorsey is most famous for being the co-founder of social networking platform, Twitter. Dorsey reportedly has most of his personal fortune tied up in Block. As per the the Bloomberg wealth index, his stake in the firm is worth $3 billion, while his position in Elon Musk’s social media company is valued at $388 million.
It’s not the first time that Hindenburg, run by Nathan Anderson, has singled out billionaires and sent their fortunes falling.
In January, the Nathan Anderson-led Hindenburg Research published a report on Indian business tycoon Gautam Adani and his business empire. The short-seller accused Adani Group of improper use of offshore tax havens, stock manipulation and raised concerns about the group’s debt levels. Adani Group has also denied all allegations, and is mulling legal optios against Hindenburg Research.
Adani, who at one point was the world’s second-richest person, now ranks 21st on Bloomberg’s wealth index with a $60.1 billion fortune.
Hindenburg also targeted electric carmaker Nikola Corp. in September 2020. Nikola’s stock plunged in the aftermath and an investigation led to a fraud conviction against its founder Trevor Milton in October.
