Short-sellers have thrown serious allegations at Block - the company behind Square, Afterpay and Cash App.

Block, led by Twitter co-founder Jack Dorsey, is facing allegations of facilitating criminal activity such as sex trafficking and drug dealing, as well as defrauding the US government's pandemic relief payments. 

The allegations were made by short seller Hindenburg Research, which also claims Square is overrun with scam accounts and fake users, thus overstating Cash App's user numbers to the market. 

The Hindenburg report - accessible here - calls for the company to reveal the actual number of unique people using Cash App and other services. 

The company has denied the allegations and has threatened to take legal action against Hindenburg.
Block says Hindenberg’s report is “factually inaccurate and misleading.”

“Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price,” it said in a statement.

“We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors. We are a highly regulated public company with regular disclosures, and are confident in our products, reporting, compliance programs, and controls. We will not be distracted by typical short seller tactics.”

Its shares fell 14.8 per cent in New York trading after the allegations were made.