, from investment research firm Hindenburg Research, took a deep dive into the company’s history over a two-year investigation, during which they spoke with former employees, partners, and industry experts and reviewed the company’s records. Hindenburg disclosed as part of this report that they had taken a short position in shares of Block Inc., the company’s new name as of 2021.
The Hindenburg report found that—contrary to the company’s mission—the business has engaged in predatory practices for those “underbanked” consumers it claimed to serve, and further committed fraud to avoid regulation and mislead investors. Among other fraudulent acts, Block has reportedly shared falsely high user counts and falsely low customer acquisition costs, two key metrics that have inspired confidence and excitement in the company’s future.
, making the company’s failure to shut these payment channels down not just financially dishonest but a moral failure. Reports have shown that Cash App is regularly used to facilitate sex trafficking and even to hire contract killers: the latter has been bragged about in a rap song called “Cash App,” which the company promoted.
Per this report, Block committed numerous other types of fraud and dishonest activity—predatory fees for its users, maneuvers to avoid compliance, and further misleading metrics offered to investors—and all the while, it was able to report growing profits and its stock grew in keeping with those reported figures. During the pandemic, Hindenburg reports that Dorsey and McKelvey “collectivelyHindenburg’s research suggested that other investigations into Block’s practices are ongoing.
I am not surprised by this! Silicon Valley VC/Startup culture is a hypocritical con job in general.