Former Twitter chief executive Jack Dorsey on Thursday became the latest target of short seller Hindenburg Research which targeted the billionaire over his payments company Block. Dorsey co-founded Block, then named Square, with James McKelvey, which started operations in 2009.
They took the company public in 2015 and Square was renamed Block in December 2021.
The Hindenburg fallout led to a massive decline in Dorsey’s net worth which dropped by millions on Thursday. Block Inc co-founder Dorsey’s fortune took a massive hit of $761 million, over 15 percent dip, according to Forbes Real Time Billionaires Index. After the plunge, Dorsey dropped to the 654th spot with a net worth of $4.2 billion.
Jack Dorsey was the CEO of Twitter from 2015 until November 2021. He stepped down from the board in May 2022.
In its latest report, short seller Hindenburg accused Dorsey of $1 billion fraud, claiming that he and his co-founder McKelvey collectively sold over $1 billion of stock during the pandemic. Other executives, including CFO Amrita Ahuja and the lead manager for Cash App Brian Grassadonia, also dumped millions of dollars in stock.
In April 2020, Dorsey promised to give away $1 billion – then 28 percent of his net worth – to Covid-19 relief and other causes, via gifts of his Square stocks. In its report, the short seller also underscored that they believe Jack Dorsey has built an empire—and amassed a $5 billion personal fortune—professing to care deeply about the demographics he is taking advantage of.
According to the Hindenburg report, Dorsey’s payments company had obvious compliance lapses that made fraud easy like permitting single accounts to receive unemployment payments on behalf of multiple individuals from various states and ineffective address verification.
After the report came out, shares of Block Inc tanked over 20 percent before closing nearly 15 percent down at $61.88.