Indian Origin Amrita Ahuja, CFO Of Block Involved In Dumping Millions Of Dollars In Stock

Hindenburg research pointed out discrepancies in inflated numbers of application users and reported key people involved in Block Inc case. Indian Origin Amrita Ahuja, CFO of Block, was also involved in dumping millions of dollars in stock along with the co-founders Jack Dorsey and James McKelvey. Both the co-founders collectively sold over $1 billion of stock during the pandemic.

Amrita is a daughter of Indian immigrants who owned a day-care center in a suburb of Cleveland, as per The Wall Street Journal report. She completed her education from premium universities such as London School of Economics, Duke University and Harvard Business School. She began her career as an investment banker with consulting firm Morgan Stanley in 2001.

Before she joined Block in 2019, she has worked with business behemoths such as Airbnb, McKinsey & Company, The Walt Disney Company, among others.

While working at Fox, she played a vital role in launching of Hulu, a streaming service platform. Additionally, at Activision Blizzard, gaming company that made "Call of Duty," "Candy Crush" and "World of Warcraft," she helped transition the video gaming company's business model from one dominated by in-store sales around the holidays to one defined by an online, always-on, multiplayer experience.

She was also featured in Fortune's Most Powerful Women Summit in 2022.

As per the research report Amrita was a key personnel that had helped in pushing of Cash App. As per the report, In September 2022, Block CFO Amrita Ahuja cited the company's purchase of buy-now-pay-later company Afterpay as an example of this strategy, saying it created "an incredible opportunity for us, particularly when you think about leveraging that capability across Cash App 80 million annual actives."

She even explained late in 2021 about how the new users were added to the app. "We saw as a customer acquisition cost across those areas of $5 in '20 - of less than $5 in 2020. And that's against the backdrop of our network growing by 50% year-over-year to 36 million monthly actives. That less than $5 is much smaller than what a traditional financial institution would pay."

And further gave reasons that Cash App achieves this low cost due to network effects, because "a customer can bring a new customer into Cash App at little to no cost for us" by inviting them to engage in a Cash App transaction.

But the Hindenburg strongly suspects, that the Block's reported cost of acquiring each new "transacting active" account is misleadingly low because single individuals may set up dozens or hundreds of accounts, including fake or scam accounts.

With its influx of pandemic Cash App users, our research shows Block has quietly fueled its profitability by avoiding a key banking regulation meant to protect merchants. "Interchange fees" are fees charged to merchants for accepting use of various payment cards. Congress passed a law that legally caps "interchange fees" charged by large banks that have over $10 billion in assets. Despite having $31 billion in assets, Block avoids these regulations by routing payments through a small bank and gouging merchants with elevated fees.

The former employees were also asked, and as per the report. "The former employee stories are corroborated by litigation records, including a 2021 consumer fraud case against Block. In July 2021 in that case, a Cash App Engineering Manager submitted a sworn affidavit detailing the step-by-step process for receiving Cash Cards, which included entering only the last 4 social security digits. A plaintiff's affidavit in the case confirmed the same."

AS per the former employee statements, in the report, "Rather than require all 9 digits of a user's Social Security number, Cash App ran the incomplete information provided through a third-party identity check company called IDology to determine whether the information belonged to a unique individual, according to a former employee."

As per the employee, given a reasoning that "Asking too many questions conflicted with Block's "frictionless" banking, as described by Block's CFO Amrita Ahuja during an investment banking conference in 2020:

"Our ambition here is to provide the values and the services that people get today from traditional financial institutions and to do that in a seamless, easy-to-onboard, frictionless, consumer-friendly way as possible."

However later in June 2022, the company made changes that captures the entire 9 digit social security as a legal requirement. seemingly an admission of past illegality. The change, which is a positive one, also seems to foreshadow more future compliance steps.