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Twitter co-founder Jack Dorsey has seen his net worth plummet by more than half a billion dollars after short seller Hindenburg Research accused his mobile payments company Block of skirting banking laws and helping clients take advantage of COVID stimulus payments.
Dorsey’s net worth stood at $4.4 billion as of Friday — an 11% drop, down $526 million compared to the day before, according to Bloomberg News.
Most of Dorsey’s wealth is derived from his ownership stake in Block, which Bloomberg News estimates to be around $3 billion.
Dorsey also owns a piece of Twitter, the microblogging site that he co-founded in 2006. Twitter was recently sold to Elon Musk, the Tesla mogul who paid $44 billion.
As part of Musk’s acquisition of Twitter, Dorsey received a $978 million golden parachute.
Dorsey currently holds a $388 million ownership stake in Twitter, which Musk took private.
Shares of Block, the parent company to popular payments facilitator Cash App and its merchant-friendly services provider Square, fell by 15% at the close of Thursday’s trading session on Wall Street.
Investors sold off company stock after Hindenburg Research, which has targeted the likes of Indian billionaire port operator Gautam Adani and hydrogen-powered truck maker Nikola, released a damning report which alleged that Block turned a blind eye to rampant fraud.
Block released a statement on Thursday denying the allegations and vowing to take legal action against Hindenburg.
The company called the report “factually inaccurate and misleading” and said it will work with the Securities and Exchange Commission to explore legal action against Hindenburg.
Hindenburg said it conducted a two-year investigation which found that Block artificially inflated the number of registered customers that use its products.
The short seller cited “dozens of interviews with former employees, partners, and industry experts, extensive review of regulatory and litigation records,” and Freedom of Information Act and public records requests.
According to Hindenburg, Block “obfuscates” the actual number of people using CashApp by repotting “misleading…metrics filled with fake and duplicate accounts.”
Hindenburg’s report on Adani, who at one point was the second richest person in the world, prompted a massive sell-off of his company’s stock.
As of Friday, Adani’s net worth was valued at $60.1 billion — a far cry from the $150 billion fortune that was attached to his name just this past September.
In 2020, Hindenburg shorted Nikola stock after accusing the green-powered truck manufacturer of fraud.
Nikola founder Trevor Milton was accused by the short seller of making false statements about possessing proprietary technology to form partnerships with large automakers.
The company’s stock price which was once worth $66 a share back in 2020 is now trading at $1.36 per share.