Jack Dorsey | Block Inc: Jack Dorsey’s net worth takes a $526 million hit after Hindenburg report on Block fraud
The Hindenburg Report on Thursday accused Dorsey’s fintech firm of committing $1 billion in financial fraud when it overstated the number of users while underestimating the cost of customer acquisition.
A day later, Dorsey’s net worth fell by $526 million, and he is now worth $4.4 billion, according to the Bloomberg Billionaires Index.
Notably, the report also accused the company’s Indian-origin CFO Amrita Ahuja of liquidating millions of dollars in shares during the pandemic as the company’s price rose.
Also Read: Who is Amrita Ahuja, the CFO of Indian-origin Block named in the Hindenburg report?
Dorsey, who also co-founded Twitter, co-founded Block in 2009 and is the company’s largest shareholder with a stake of around 8%. Bloomberg’s wealth index estimates his stake in the firm is worth $3 billion, while his position in Twitter is valued at $388 million. The short seller added that co-founders Dorsey and James McKelvey collectively sold over $1 billion in stock during the pandemic as the company’s share price rose.
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The report said Block exploited the demographics it claimed to help, adding that former employees estimated that 40% to 75% of the accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single person.
Cash App allows users to transfer money through a mobile application and is touted by the company as an alternative to traditional banking services.
The app recorded 51 million monthly transaction activities, up 16% year-over-year during December 2022, Block said in its fourth-quarter earnings letter. It’s the best choice, used for sex trafficking, Hindenburg said, referring to a non-profit organization.
Meanwhile, Block said the report was “designed to mislead and confuse investors”. The company has denied the allegations and said it plans to investigate legal action against the short seller.
Block fell a whopping 22% on Thursday, before closing down 15%.
Hindenburg Research had earlier released an investigation into Adani Group’s Gautam Adani and his empire, sending the companies’ shares tumbling and wiping tens of billions of dollars from his net worth. Adani, who was once the world’s second-richest person, now ranks 21st on Bloomberg’s wealth index with a fortune of $60.1 billion. Founded in 2017, it is a forensic financial research firm that analyzes equities, credit and derivatives.
