Financial research firm Hindenburg Research accuses Jack Dorsey’s Block of inflating user metrics and “frictionless” fraud facilitation enabling insiders to profit over a whopping $1 Billion.
Hindenburg’s 2-year investigation report features regulatory and litigation records, interviews with ex-staff, partners, and industry experts, as well as FOIA and public records requests.
Block’s (previously Square) ex-employees stated that many users have multiple accounts associated with them, inflating user metrics.
According to former staff, between 40% and 75% of the accounts they assessed were duplicates, fraudulent, or phony.
Block reportedly conceals the number of unique users of Cash App by providing false statistics on transactions that comprise many accounts belonging to the same user.
Former workers presented Hindenburg with blocked accounts linked to multiple active accounts that were suspected of fraud.
Block even paid to advertise a music video for the song “Cash App,” which talked about hiring contract assassins using the app. Later, the song’s creator was detained on suspicion of attempted murder.
According to a major non-profit, Block’s Cash App is by far the most popular app used in sex trafficking in the United States.
Former workers detailed how Cash App suppressed internal worries and disregarded user cries for assistance as fraud and illegal activity proliferated on its platform.
This seems to be an attempt to circumvent AML regulations in order to increase Cash App’s user base.
Block had glaring compliance flaws that made the fraud possible, like allowing single accounts to get unemployment benefits for several people from different states and insufficient address verification.
The Secret Service, FinCEN, and state regulators all clearly identified the issue of multiple payments coming to the same account as a sign of fraud, but Cash App disregarded their warnings.
Block disregards rules despite having $31 billion in assets by sending payments through a small bank and charging excessive fees to businesses.
According to Hindenburg, Block deceived investors about important metrics, supported predatory products, and engaged in compliance violations in order to promote growth and make money by facilitating a fraud against consumers and the government.
Hindenburg stated: “We also think Jack Dorsey has built an empire—and amassed a $5 billion fortune—professing to care deeply about demographics he is taking advantage of. Having sold shares near the top, he’s ensured he’ll be fine regardless of the outcome for everyone else.”