> 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.
I think you misunderstand my comment as an appraisal of crime, or something. My point is that wealthy financial criminals get off the hook way too freely, and that this is the injustice (relax, I'm not the justice warrior you think I am).
> This is really just an attack on non-wealthy people.
It is not an an attack. Neither is it an "attack".
Nobody got hurt, nobody needs stitches, nobody was in fear for their life, autonomy, or well-being. Nobody brandished weapons, nobody damaged physical objects. That is why it is not an attack.
In modern parlance people started calling it an "attack" when someone was ever slo slightly mean to them. I think this usage is contemptible and should be called out. It devalues the meaning of the word. If a market participant publishing research is now an attack then what will you call when someone throws a punch and breaks a nose, or douses someone with gasoline and lights them on fire, or fires an intercontinental ballistic missile at a city?
> 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?
5. 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.
The idea that some cryptocoin is used by some large but unseen group of people is often talked about but nobody presents the data that show that this group really exists. Is there some real data that shows that this large group actually exists or is it all speculation?
And a large number of cigarette shops and bodegas in the US have lottery tickets. Is there a clear reason why we assume it's for remittances and not for gambling? I know in South Asia for example most of it is indeed for degenerate gambling/"get rich overnight" schemes.
This ought to be a verifiable claim, thanks to Street View. I looked around the airport[0] and in[1] various[2] streets[3]. The images are from last year, but they don’t show cash changers with either tether or BTC logos. I did end up finding one[4] after searching through seven, although it is dedicated to cryptocurrencies (it was next to a cash exchange, it isn't one), and its website states this[5]:
> Is exchanging cryptocurrency legal in Turkey? Yes, it is legal to buy, sell or trade your crypto money as long as crypto money is not used to pay goods or services.
They also mention they only pay out in USD. That makes it sound like the only possible use is for a Russian to convert Rubles to BTC in their home country, exchange BTC with USD there, then go next door to exchange their USD with Lira. That is so heavily tied to sanctions that it can explain why actual cash exchanges don’t support cryptocurrencies.
It’s how I used it. To donate to an Ukrainian streamer many years ago who couldn’t use PayPal and to transfer money easily to my then girlfriend in South Africa (though that got replaced by xe.com later). It was just far easier and cheaper than the alternatives.
Since the Bitcoin supply is capped, the price itself is data about it being used. At present, it will cost you $28,000 to obtain 1 Bitcoin from those of us who value it.
So these people want to avoid law, by avoiding paying taxes or fees of their capital. Which is precisely #2 from the parent poster - "Users who have BC because they need it for illegal gains".
I'm not assigning a moral value to this. I'm just commenting that law avoidance is law avoidance, even if you really really want or need to do it.
Tokens are useless in comparison to monay for almost any activity, except for law avoidance. For this task they are amazing.
Russia is currently fighting a war of aggression, applying controls on the flow of money in or out of there is one way in which the war machine can be starved.
"Aggression" is an objective measure. There is no subjectivity who starts a war and wo is in another country's territory. Those are observable facts.
And obviously Russia did not believe Ukraine to be a threat - or they would have not done this haphazard invasion with too little preparation and too few soldiers, so there is no excuse.
A state can always find a way to hide the transactions, on the other hand
I think the risk of sanctions, means that while there are work arounds, the cost of those work arounds, and the restrictions on who will do business with you, dramatically increase the costs of certain goods.
So sure, the cash moves, but now you pay more. A lot more. Death by 1000 cuts, and all that...
All these categories are like about 5% each, the 80% is normal hard working people who don't like hard working — it is literally hard work! — and to whom crypto gives hope as a magic box in which one throws pennies and dollars come back. It's a bit creepy (the game is in fact zero/negative sum) but then gambling is not generally illegal.
Notably Block, the company in the article enables Bitcoin only, not crypto in general.
> the 80% is normal hard working people who don't like hard working
Another way to look at it is that 80% of Bitcoiners don’t like the value of their hard work to be continuously debased at a rate of 2-8+% year after year or being subjected to the whims of the Fed’s money printer which recently expanded the entire money supply by over 40% then claimed it wouldn’t drive inflation before claiming that inflation was temporary.
1. Bitcoin users who hate the fractional reserve model of banking with fiat or the ability for the Fed to print fiat arbitrarily is probably a majority
2. Hold Bitcoin for illegal uses, probably a small minority as there are better options such as Monero for illegal uses
3. Probably a majority of Bitcoiners are opportunistic investors. Why is that bad?
4. Web3ers, a minority of Bitcoiners. You are thinking of altcoins. (Yes Ordinals on Bitcoin are now a thing and are controversial in the Bitcoin community, but most Bitcoiners are hard money proponents who are not interested in NFTs)
I find these takes to be so disingenuous. The dollar is used in this manner in spite of legal and regulatory efforts. Bitcoin is used in this manner bc it was designed explicitly to be immune to these efforts.
I respect people who believe money should be uncensorable. But at least own that view and the implications, instead of all of this fiat whataboutism.
I have no problem saying that cash should be uncesorable, as far as that goes.
But it as limits built in - it has to physically transfer hands, true anonymity is difficult, and is practically limited in its scale (moving and then using $1,000,000 in cash is logistically less practical than using a wire transfer).
Ie. it is mighty difficult to use cash for ransomware attacks, and it is not that simple to get paid in cash for a kidnapping (eg. the case of the guys who kidnapped a schoolbus, but while working out how to collect their ransom, the kids escaped.)
> I respect people who believe money should be uncensorable.
Why? That is just another way of saying moneyed interests should be above the rule of law. What could possibly be respectable about a view this odious?
I agree. It's an extremist position to say that money should be outside the rules of society.
Let's take an experiment. Instead of "I should be free to send money to anyone anywhere", we'll replace money with a car.
"I should be free to drive my car anywhere, anytime". Sounds superficially like a reasonable proposition even? But in fact we have lots of rules that control who can drive a car, where, under what intoxication. There are driver's licenses, traffic signs, road police... Ultimately a judge will put you in jail if you exercise your freedom to drive outside of society's rules.
Now imagine someone using the pseudonym Suzuki Toyotamoto invents a car made out of floating jello with an engine that runs on nuclear waste. Many engineers will marvel at the ingenuity of the design. Some people start building their own jello blobs and driving them off-road without a license. The law says nothing explicitly about transportation inside floating jello. Eventually people take their floating jello vehicles to roads and get fined. (The jello moves barely at walking speed and drips radioactive sludge.) Outrage blows up in the floating jello community. Do the old rules apply to them? Will the whole world switch over to floating jello? (These questions may seem very important to those versed in the world of Suzuki Toyotamoto's floating jello, but most people just don't care and will happily keep using their regular cars instead of sitting in slime powered by radioactive waste.)
Because I appreciate different viewpoints. I may not agree with you but I can respect your opinion. What I don’t respect is people who draw false equivalencies and try to wiggle out of the consequences of their views.
I don’t think Chase freezing your account and refusing to tell you why counts as rule of law. I don’t see what’s so odious about coming up with a solution to move money that doesn’t involve financial institutions.
I 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.
Block 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.
Worth 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).
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.
In 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?
Venmo 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-
I 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
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.
I am not too aware how it is in the U.S. In continental Europe you usually need to provide verifiable form of official identification, like a driver's license, a national ID card, a passport, or any of that in digital form (like the Estonian ID program for example). I never got this thing with utility bills.
The point here is to prevent money laundering and KYC is one instrument out of many for this.
Now come to think of it, in Germany for example, if it can be shown that if a bank employee, even after a good KYC had reasons to doubt that the account holder is the ultimate recipient of the funds or if the client is involved in money laundering, they might be personally criminally liable. Wonder how that is in the U.S.
I 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.
Parag 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.
I'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?
Yes, 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.
No, 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!)
“ 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.
This here is why I never believe anything someone says about cryptocurrencies. Every time I ask a crypto enthusiast they'll eventually relent that yes they do own a lot of crypto they expect will go up in price.
(And in case someone argues that this is the same as anything else, it isn't. I own an iPhone. I recommend them to people, it works well etc. I don't benefit at all from Apple stock price going up.)
It 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.
> 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?
> 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.
Simple: short sellers can, if they manage to drive the underlying stock price too low, trigger automated "stop loss" orders, which can (and do) send the stock towards complete collapse. And that in turn can cause a cascade of stop-loss orders e.g. for stocks in indices where the flash-crashing stock has a sizable exposure.
Yes, market regulators can issue halt orders to stop all trade regarding affected stocks, but that still has the potential to cause widespread and immense loss of value.
People going long for no reason but "420.69 $GME" are funny to laugh at, and if they buy the right options they can make a lot of money, but there is no potential of cascade events.
Therefore, it makes sense to keep a close watch and a tight leash on shortsellers.
That is not an actual problem. And in the real world, institutional investors with capital reserves sufficient to really move markets don't generally use such simplistic "stop loss" orders. They have more sophisticated trading and hedging strategies.
There is no need to keep a tight leash on short sellers.
There is no fundamental reason to be upset with short sellers; they can be honest or dishonest about their motives just as holders of long positions can be. When they are honest and open, they provide a service to the community in the same way that honest & open holders of long positions do.
The short position is fundamentally the belief a venture will fail and historically there is three ways for that to be a successful bet; 1) be lucky 2) do your research thoroughly and then be lucky or 3) cause that venture to fail.
So in this case your defense is limp wristed, you ask only 'well what about' without ever answering the core qualm.
> The short position is fundamentally the belief a venture will fail and historically there is three ways for that to be a successful bet; 1) be lucky 2) do your research thoroughly and then be lucky or 3) cause that venture to fail.
This mirrors precisely the ways for a long position to succeed. A holder of shares in a venture can work to cause that venture to be successful. This is pretty common, in fact.
when valuing a company you generally look at cash flows and expectations of future cash flows. a company with $1 billion in the bank is worth less than $1 billion if they're posting annual net income of -$300mm
It 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.
FYI: 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.
As 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.
That 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.
"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.
I 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.
> 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.