MEXCHindenburg Research Grills Block’s Official Response; SQ Stock Price In Danger?
According to U.S. short-seller Hindenburg Research, Block Inc.’s (SQ) reaction to its charges proved the company had been giving investors false information about the number of users of its Cash App for years. As of December 31, 44 million of the Cash App’s more than 51 million monthly active users had their identities validated, according to the payments company headed by Twitter co-founder Jack Dorsey.
Block Confirms Inflated User Count
The announcement comes after Hindenburg Research published a report the previous week in which it stated that former Block employees estimated that 40% to 75% of the accounts they assessed were fraudulent, involved in fraud, or extra accounts related to the same people. Following the opening of a short position in Block, Hindenburg asserted in the report that the payments company misrepresented the number of users of its Cash App and underestimated the costs associated with acquiring new customers.
Hindenburg was quoted as saying:
Block’s newly reported internal estimates also show that its previously reported 51 million monthly transacting actives as of December 2022 represented a 16%-31% inflation of its actual estimated internal user counts.
Read More: Top Mastercard-Backed Blockchain App Migrates To Hedera; Is HBAR Price Gunning For $1?
Hindenburg Claims Block Ignored Core Issues
The report provided precise details of compliance issues that led to Block supporting fraudulent pandemic relief payments estimated to be in the billions of dollars. These loopholes included glaring omissions such as the authorization for a single account to take unemployment payments on behalf of a large number of people residing in a variety of states.
In its response, Hindenburg contends that the company offered only a high-level defense of its compliance policy while acknowledging that it “saw an increase during 2020” of risk loss. In addition to that, the corporation did not provide an estimate of the loss that would be incurred by the government and the taxpayers of the United States as a direct result of the facilitation of fraudulent pandemic relief payments.
Also Read: Prominent Crypto Analyst Predicts Polygon (MATIC) Price Surge Following This New Development
- $7B Virtu Financial Holds $63M XRP as Whales Accelerate Daily Sell-Off
- Breaking: Coinbase Nears $2B Deal to Buy Stablecoin Platform BVNK
- Coinbase CLO Fires Back at Senator Murphy Over ‘Corruption Factory’ Claim
- Crypto Prices Rise: Why Are BTC, ETH, LTC, XRP, SHIB, and ADA Up Today?
- Michael Saylor’s Strategy Eyes S&P 500 Spot Amid Bitcoin-Backed Credit Products Launch
- Pepe Coin Price Forms Multi-Year H&S Pattern as Whale Selling Intensifies
- Ethereum Price Forecast: $5K in Sight Post-Fusaka Upgrade
- Chainlink Price Eyes $25 as AllUnity Integrates CCIP for EURAU Expansion
- Sei Price Forecast: Will Robinhood Listing Spark a Rally?
- XRP Price Outlook as ETF Nears Possible November 13 Launch
- Cardano Price Risks 20% Crash Amid Death Cross and Falling ADA ETF Odds
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
