Report Accuses Jack Dorsey’s Block And Cash App Of Being Involved In A $1B Fraud Scheme
Since its launch in October 2013, Cash App has been one of the most convenient forms of payment. However, now, that may have them in hot water.
The post Report Accuses Jack Dorsey’s Block And Cash App Of Being Involved In A $1B Fraud Scheme appeared first on AfroTech.
According to a Hindenburg Research report, Jack Dorsey’s Block Inc. is allegedly part of a $1 billion fraud scheme that enabled the company to “profit from facilitation of fraud against consumers and the government.”
“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,” the report reads.
The report shares that the $44 billion market cap company’s intent for its frictionless technology to empower the “unbanked” and the “underbanked” became a ploy for fraudulent activity.
In a two-year investigation, Hindenburg Research claims that Block “made it easy” for account users to be involved in identity fraud, to steal funds, as well as other crimes.
Further, the report reads: “Even when users were caught engaging in fraud or other prohibited activity, Block blacklisted the account without banning the user. A former customer service rep shared screenshots showing how blacklisted accounts were regularly associated with dozens or hundreds of other active accounts suspected of fraud.”
Additionally, the report speculates that the scheme has been alluded to in multiple rap songs such as in LA rapper Nuke Bizzle’s song “EDD,” (Employment Development Department, which distributes unemployment in California).
“I done got rich off of EDD / Ain’t hit no more licks ’cause of EDD,” the song goes.
Back in July 2022, the rapper, whose real name is Fontrell Antonio Baines, was sentenced to six years in prison after pleading guilty to filing more than $1 million in fraudulent unemployment claims with stolen identities, according to Rolling Stone. Hindenburg’s report notes that Cash App was “the only payment provider mentioned” in Baines’ indictment.
In addition to Nuke Bizzle’s song, the listed incriminating language is said to also be found in the rap lyrics of Teejayx6’s “Cashapp” and 22Gz’s “Cash App.”
“CEO Jack Dorsey has publicly touted how Cash App is mentioned in hundreds of hip hop songs as evidence of its mainstream appeal,” said Hindenburg. “A review of those songs show that the artists are not generally rapping about Cash App’s smooth user interface—many describe using it to scam, traffic drugs or even pay for murder.”
Following the release of Hindenburg’s report, Block shared a statement in response.
“We intend to work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business today.”
The company added, “We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors.”