Muddy Waters short-sells US crypto-friendly bank SOFI, alleging it inflated profits by 1 billion dollars through financial fraud
Foresight News reports that, according to the latest report released by the short-selling agency Muddy Waters, it has established a short position against SoFi Technologies, Inc. (SOFI), the first nationwide chartered bank in the United States to support Bitcoin and cryptocurrency trading. The report accuses SOFI management of allegedly recording a $312 million loan from JPMorgan as a "loan sale" in order to inflate reported profits and earn management bonuses, while shareholders have to bear about a 15% annual dilution.
Muddy Waters pointed out that the UCC filing in Utah shows JPMorgan as a "senior lender" in the transaction rather than an asset buyer, which contradicts SOFI's accounting treatment. The report believes that SOFI will ultimately have to restate the $312 million transaction, which may lead to the restatement of about $1 billion in previously reported EBITDA, and its actual capital adequacy ratio will be significantly reduced. Additionally, the report accuses SOFI of using the "secured loan" program to support its unrealistic fair value marking of personal loans, in order to maintain its financial narrative.
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