Block shares plunge 19% after short seller Hindenburg says Jack Dorsey’s company facilitates fraud

March 23, 2023

Shares of Jack Dorsey's Block plunged 19% after short seller Hindenburg Research announced Thursday that the payment company was its latest short position, alleging that Block allowed criminal activity to operate with lax controls and "highly" inflates Cash App's transacting user base, a key metric of performance. Up to 35% of Cash App's revenue is derived from interchange fees, Hindenburg alleged. That's around $892 million in revenue that the short seller said should be capped by law. Hindenburg took issue with Cash App's practices during the Covid pandemic, when the government issued stimulus checks to qualified American adults. Citing interviews with former employees, Hindenburg alleged that "pressure from management has resulted in a pattern of disregard for Anti-Money Laundering (AML) and Know Your Customer (KYC) laws."