Jack Dorsey has lost over $500M as his company, Block, was preyed on by short sellers resulting in the collapse of its stock shares. The short seller, Hindenburg Research, accused his platform of being involved in money laundering and skirting banking laws.
Jack Dorsey gets a rough day as Block gets preyed on by short sellers
The report from Hindenburg Research has made the market go wild, leading to Jack Dorsey’s net-worth slumping 11% in a day. This fall in Dorsey’s net worth came from the sell-off of Square shares, a subsidiary of Block.
Block is the parent company of Square and Cash App. Square has been trading publicly since listing on New York Stock Exchange in 2015. It had been operating smoothly for all that long until it became the target of Hindenburg Research which saw its shares lose value by 15% during the close of Thursday.
Square is one of many companies that short-seller Hindenburg Research has targeted. The short seller has followed other big names like Indian Billionaire Gautam Adani and hydrogen-powered car maker Nikola.
Block to use litigation against Hindenburg Research
On Thursday, Dorsey’s Block said it was preparing to take legal action against Hindenburg Research. The company said that reports against it were misleading and false. It added that it would work with the Securities and Exchange Commission to prove its innocence legally.
Conversely, the short seller said that it had been conducting deep investigations for the past two years and discovered that Block artificially inflated the number of its registered customers to facilitate shady deals. It said it had conducted dozens of interviews with former employees, partners, and industry experts, which helped it conclude that Block was operating against US banking laws.
However, till now, Block has not taken any legal action against Hindenburg research. Keep watching Fintech Express for updates on this and other fintech-related stories.