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 financial fraud of $1 billion as it overstated the number of users while understating customer acquisition costs.

A day later, Dorsey’s net worth fell by $526 million and he is now worth $4.4 billion, according to Bloomberg Billionaires Index.

Notably, the report also accused the company’s Indian-origin CFO Amrita Ahuja of liquidating millions of dollars in equities during the pandemic as the firm’s price climbed.

Also read: Who is Amrita Ahuja, the Indian-origin CFO of Block named in Hindenburg report?

Dorsey, who also cofounded Twitter, cofounded Block in 2009 and is the company’s largest shareholder with a stake of around 8%. The Bloomberg 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 cofounders Dorsey and James McKelvey collectively sold over $1 billion of stock during the pandemic as the company’s share price soared.

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The report said Block took advantage of the demographic it claimed to be helping, adding that former employees estimated that 40% to 75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual.

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 clocked 51 million monthly transacting activities, a 16% year-over-year increase during December 2022, Block said in its fourth-quarter earnings letter. It is the top choice, used for sex trafficking, said Hindenburg, citing a non-profit organisation.

Meanwhile, Block said the report was “designed to deceive and confuse investors”. The company has denied the allegations and said it plans to explore legal action against the short-seller.

Block fell as much as 22% on Thursday, before closing down 15%.

Hindenburg Research had earlier released an investigation into Adani group’s Gautam Adani and his empire, causing his companies’ stocks to plummet and erasing tens of billions of dollars from his net worth. Adani, who at one point was the world’s second-richest person, now ranks 21st on Bloomberg’s wealth index with a $60.1 billion fortune. Founded in 2017, it is a forensic financial research firm that analyses equity, credit and derivatives.