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Block loses 20% of value as Hindenburg Research alleges fraud
- threatofrain 4y agoDirect link to the source website: https://hindenburgresearch.com/block/ https://hindenburgresearch.com/block/
- SeanAnderson 4y agoIt seems like a pretty wild time to be on the offensive against American fintech companies. No real comment on the merits of their research (yet), just a little shocked at the timing.
- illiarian 4y agoWhen is the right time to go against predatory and corrupt companies? Yesterday. But today is a good second choice.
- squokko 4y agoWhy?
- gordon_freeman 4y agoFYI: Hindenburg Research on Block (Square) has been going on for last 2 years. Not saying the release of the report is strangely coinciding with all the bad news we are having about Finance/Banking industries but wanted to add this info.
- DoctorNick 4y ago“You’d shoot a man in the back?” “Well, it’s the safest way, isn’t it?”
- phnofive 4y agoAlways has been...
- blitzar 4y agoTo shoot someone in the back, first you have to get behind them.
- polygamous_bat 4y agoWell, it's easy when they blindly rush forward without checking for a looney-tunes looking cliff... See [1] for example, where Hindenburg was able to acquire a debit card for "Donald Trump" with a fake ID. [1] https://hindenburgresearch.com/block/ https://hindenburgresearch.com/block/
- PaywallBuster 4y agoDoesn't look like Block's collapse would cause any issues with the financial system
- deleted 4y ago[deleted]
- mschuster91 4y agoAs a German, I used to think the same back when Wirecard was first attacked - and look where that ended. Right now, the financial system is extremely unstable - bad actors with an awful lot of exposure have been exposed, and a lot of people are like sharks in the water, smelling blood. It looks like we're due for another come-to-Jesus moment in the banking scene, they haven't learned enough from 2008.
- jahnu 4y ago> they haven't learned enough from 2008. I think it looks like they learned a lot! I.e. make sure you get too big to fail.
- mschuster91 4y agoThat one is on the regulatory agencies as well - they looked on silently as larger banks gobbled up smaller ones, or in the case of UBS/CS, actually forced them to merge.
- nikanj 4y agoCredit Suisse was too big to fail just a month ago
- jhugo 4y agoAnd indeed the government forced a merger with UBS, reaffirming that they were too big to fail.
- astrange 4y ago"Too big to fail" means the regulators tell you what to do /all the time/, not just after you've failed. You don't want to be too big to fail! There's a lot of businesses only small banks can do, like backing sweep accounts and neobanks like Simple/Aspiration.
- blitzar 4y agoWhy do you say that? "apps" that do nothing more than transfer money two parties, representing 0 innovation and doing nothing new are valued in the 10's - 100's billions.
- churchill 4y agoBlock published a press release [0] saying they intend to sue. But, that article by Hindenburg seems quite in-depth and they'll have a hard time squeezing themselves out of this. [0]: https://investors.block.xyz/news/news-details/2023/Blocks-Response-to-Inaccurate-Short-Seller-Report/default.aspx https://investors.block.xyz/news/news-details/2023/Blocks-Re...
- Closi 4y agoWorth noting that the title of this HN post is a little misleading - and Hindenburg actually have not accused Block of fraud (only of facilitating others to commit fraud through their platform).
- achow 4y agoHidenburgh seems to have directly accused Block. Block has systematically taken advantage of the demographics it claims to be helping. The “magic” behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics. https://hindenburgresearch.com/block/ https://hindenburgresearch.com/block/
- noodles_nomore 4y agofacilitate: 1. To make easy or easier. From French faciliter, from Latin facilis ("easy").
- Closi 4y agoFacilitating fraud != committing fraud Most banks and payment platforms will facilitate fraud to some extent, but it’s their duty to reduce this with compliance procedures.
- deleted 4y ago[deleted]
- benjaminwootton 4y ago“ Initial Disclosure: After extensive research, we have taken a short position in shares of Block, Inc. (NYSE: SQ). This report represents our opinion, and we encourage every reader to do their own due diligence. Please see our full disclaimer at the bottom of the report.” I’m surprised that it’s legal to short sell then go on the attack. If it is, imagine having the cojones to do that and then go live with this report.
- bobnamob 4y agoThat’s Hindenburg’s MO. Extensive research -> short position -> publication of research
- Closi 4y agoIt’s legal but you must talk about facts and not make anything up, and you must act without insider information. This is why the report is surgical in its wording.
- mschuster91 4y agoIt actually is legal and the way how Hindenburg Research (and other popular/infamous shortsellers) make money: Research and expose fraud to hold companies accountable, with a (massive) financial stake to be correct in the research. Personally, I used to be quite antagonistic to shortsellers, but at least the ones holding onto the principles of journalistic integrity and good research provide good value to society. Just look at Wirecard.
- jhugo 4y ago> Personally, I used to be quite antagonistic to shortsellers, but at least the ones holding onto the principles of journalistic integrity and good research provide good value to society. Just look at Wirecard. Which ones don't provide value to society, and how do they differ from shills with a long position?
- mschuster91 4y ago> Which ones don't provide value to society, and how do they differ from shills with a long position? For example, ones that bet on a stock price where the resulting market cap goes far below the net value of the company (i.e. value of assets - value of liabilities) without any indicators backing that. The "ape army" exposed these shortsellers at GME and iirc, led to the dissolution of at least two of them.
- phnofive 4y ago> Dorsey [...] told investors about the large number of songs named after Cash App and described how music had become a way to share with others how valuable the app is to them personally, providing them with “so much utility.” > A review of songs mentioning Cash App shows that the artists are not generally rapping about Cash App’s smooth user interface and robust software integration toolkit. > Instead, lyrics describe how easy it is to move money through Cash App to facilitate fraud, traffic drugs, or even pay for murder.
- pavlov 4y agoDorsey is a big Bitcoin fan, so that’s the kind of utility he appreciates. Coming soon: the CashApp ransomware API.
- Bilal_io 4y ago> Dorsey is a big Bitcoin fan, so that’s the kind of utility he appreciates. This sounds disingenuous. Not every fan of Bitcoin supports fraud, drug trafficking.. etc. The dollar is used for such bad activities, should we label everyone that loves the dollar as a supporter of fraud and drugs?
- KingOfCoders 4y agoI would be interested in the percentage of 1. Bitcoin (crypto) users who (only) have BC because they hate fiat money 2. Users who have BC because they need it for illegal gains 3. Opportunistic investors 4. Web3ers I have the unsubstantiated feeling that 1 is overstated.
- dragonelite 4y agopoint 4 is pretty much 3.1
- throw239849234 4y ago5. People for whom fiat money is impractical for one or more reasons This category is way larger than people in well-banked Western circles realise. Bitcoin (crypto) is one of the easiest ways for people affected by capital controls or sanctions (on the financial institutions they use, or the country they were unlucky enough to be born in) to freely move their (legally earned, and taxed) money across borders. Since one of the countries with strict capital controls is China, and one of the countries affected by sanctions is Russia, the scale of this usage of crypto is huge.
- andirk 4y agoOK now do Western Union. Full disclosure: I'm heavily invested in SQ.
- intev 4y agohttps://en.wikipedia.org/wiki/Whataboutism https://en.wikipedia.org/wiki/Whataboutism
- mardifoufs 4y agoNo, shouting whataboutism isn't actually some sort of universal gotcha even if it's the new overused internet buzzword. What you call whataboutism can be called precedent or market expectations. That's even how you usually do market research: you compare a company to its peers and determine the baseline (for revenue, financials and even the percentage of transactions that are fraudulent!)
- slv77 4y agoWestern Union got fined a half a billion dollars because it helped facilitate fraud: https://www.justice.gov/opa/pr/western-union-admits-anti-money-laundering-and-consumer-fraud-violations-forfeits-586-million https://www.justice.gov/opa/pr/western-union-admits-anti-mon...
- dboreham 4y agoI missed the memo, which led to a few minutes trying to remember which blockchain company was named "block" but: why not cube? Or Hypercube?
- achow 4y agoBlock as in Blockchain.
- quickthrower2 4y agoMore like line or point now.
- polygamous_bat 4y agoMy impression: because Jack Dorsey is a cryptobro and the rebranding was done in December 2021 when Blockchain was all the hype. Of course, then came Terra Luna, FTX, and all that shebang, and Block wasn't the hot name it was anymore.
- red-iron-pine 4y agoMight be time to rope in Jennifer Lopez for a marketing push
- posharma 4y agoI know this is going to be controversial, but I think it has to be said. Jack ruined Twitter first [1] (by over-hiring and then selling it to Elon) and now it's Block's turn. He still made billions, while thousands got laid off and are still suffering under Elon's questionable so called leadership. Are these the entrepreneurs we should be looking up to? The tech industry is already facing the brunt because of the mistakes CEOs have done by "miscalculating" or "misjudging" the macroeconomic conditions; the same CEOs are enjoying their billions. [1] https://twitter.com/jack/status/1588913276980633600 https://twitter.com/jack/status/1588913276980633600
- jmeister 4y agoTwitter and Square wouldn’t have existed without Dorsey. Let’s not throw the baby out with the bathwater.
- posharma 4y agoThat doesn’t make him a good, responsible CEO.
- pwdisswordfishc 4y agoOkay, what can we say about his redeeming qualities for a change?
- astrange 4y agoParag sold to Elon, and he got a great return for shareholders by selling at far above market value. Jack doesn't do anything but meditate and grow a beard like he's young Steve Jobs. Why the board let him be CEO when he didn't do any apparent work is a different question.
- raverbashing 4y agoWho takes the deal or not is the board. Sure, Parag did the work, as it was his job as CEO
- hellomyguys 4y ago
- regulators 4y agoVenmo has massive fraud too. I knew drug dealers in 2017 in San Francisco who openly sold marijuana, cocaine and other drugs via Venmo. Tens of thousands in transactions every 2-months. Hindenburg criticized the ability for a user to get a debit card by mail in any name but that is a form of KYC. It is true many companies including PayPal don’t force you to provide your social security number. But the user can still be tracked. I have never provided my social security number or face or ID to Venmo, PayPal or Cash App. And the name I use on all those accounts is not my legal name. I do pay my taxes, I don’t commit crimes and it’s the name I use in real life and on social media. This is more an attack on privacy rights and easy access to financial services. If fraud happens, law enforcement should prosecute. Don’t punish the lawful consumer. Hindenburg’s just a more sophisticated scammer who apparently made $5 million off this trade- https://twitter.com/unusual_whales/status/1638978604867665928 https://twitter.com/unusual_whales/status/163897860486766592...
- jevgeni 4y ago> Hindenburg criticized the ability for a user to get a debit card by mail in any name but that is a form of KYC. Not sure I understood you correctly, but this is the opposite of KYC.
- blitzar 4y agoDid they mean that once you obtained banking in one false name you could use that to pass KYC with other facilities?
- jevgeni 4y agoI thought maybe it's something like that, but that's still not KYC. Or maybe it's software engineer's "know-your-client" in a way, where if you have a consistent internal ID for the client that's enough. :D
- blitzar 4y agoBut does anyone really "know" their customer? I wonder how far you could get, if they provide a bank like statement you might be able to get phone servce / utilities (in parts of the world where your SS number isnt your password). Likely never able to get an actual bank account through however.
- sedatk 4y agoHindenburg's on fire nowadays.
- CatWChainsaw 4y agoOh the humanity.
- sam_goody 4y agoIn yesterday's thread about Hindenburg's post[1], there were several who claimed that Square rounds down to the nearest penny when paying their customers, and keeps the difference, and this amounts to millions. This both for their shares and their payments. I do not know if that is fraud, but if so, Hindenburg should pay attention. BTW, this was done in Superman, and used to build an [evil] AGI. Of course, that is just science fiction. Just to be sure though, is Square a partner in OpenAI? [1]: https://news.ycombinator.com/item?id=35273782 https://news.ycombinator.com/item?id=35273782
- neffo 4y agoFraud? Illegal? Samir this is America!
- TaylorAlexander 4y agoIt was also done (incorrectly) in Office Space, noting the inspiration from Superman in the text of the film.
- Liberonostrud 4y agoI haven't used Bitcoin since 2014. In ten years I never missed it once. Unlike my phone, or Hackernews website. But, I am not a criminal or scammer, so not the target group I guess. Bitcoin is like Victor Wondermega RG-M1.
- locallost 4y agoI agree there's a need for short sellers to keep the market in check, but this quote, also listed as the number one issue, doesn't really sit well with me: > Misleading investors by overstating its genuine user counts, with former employees estimating as much as three quarters are “fake, involved in fraud, or…additional accounts tied to a single individual.” Do they really know? Or is it just a feeling that they have, or a rumour somebody spread? Is it a rumour a former disgruntled employee blew up out of proportion? The risk to the short seller is clear, but if they're going to advertise themselves as a "new breed of short sellers, relying on deep research", then they should come up with deep research, not this. Of all the things listed, I didn't see one thing that is based on any real data. They obviously hold clout because if I came up with this, the market wouldn't really care. But maybe it can't really be fixed, don't know. Maybe the short seller is the fraud and it needs to take down several companies before people realize it's BS and eventually gets wiped out.
- shp0ngle 4y agoThe report is quite long and detailed
- squishy47 4y agoI've not read the article but I have a question: lets say, after an investigation by the Gov, the illegal doings in the article turn out to be false. Do the company shareholders of the accused company have the right to sue, in this case Hindenburg research, for the stock value loss due to the article?
- polygamous_bat 4y agoYes, if you publicly claim things that are not true and it causes a company's share price to go down, the shareholders can sue you for damages. For example, [0] shows how Elon got sued by twitter shareholders for his "bot" claims. [0] https://www.bloomberg.com/news/articles/2022-08-01/musk-sued-by-twitter-investor-seeking-to-force-44-billion-deal https://www.bloomberg.com/news/articles/2022-08-01/musk-sued...
- shp0ngle 4y agoThey even made a rap compilation video! https://www.youtube.com/watch?v=StjWk3Mj-M4 https://www.youtube.com/watch?v=StjWk3Mj-M4
- domatic1 4y agoLooks like there is a full attack against crypto related companies