Block (SQ) share price tumbled 18% following the publication of an investigation by short selling firm Hindenburg Research

Hindenburg claims to have investigated the payment service providers Block Inc. for the last two years and released a report today. It alleges that Block inflated user metrics and insiders sold the top.

Criminals Use Block’s Cash App

According to the firm’s annual report for 2022, they have 51 million monthly “transacting active users”. But, formal employees told Hindenburg that 40 to 75% of accounts on the Cash App are fake, involved in fraud, or additional accounts of existing users.

They claim that Cash App is wide open for criminals. An employee says, “Every criminal has a Square Cash App account.”

Hindenburg claims that pressure from top management has resulted in disregarding anti-money laundering (AML) and know your customer (KYC) laws.

Block’s Cash App enables creating an account with a phone number or an email address.

Donald Trump Visa Cash App Card

Hindenburg claims that it is easy for wrongdoers to impersonate celebrities using Cash App. They created two accounts with the names Donald Trump and Elon Musk and exchanged funds between these two accounts.

They also ordered a Cash App Visa card in the name of “Donald J. Trump” in June 2022 to test Block’s compliance. 

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Author: Harsh Notariya

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