Argentine News Outlet Infobae Reports Investigation into dLocal for Potential $400 Million Fraud
In a recent development, DLocal Limited (NASDAQ: DLO) witnessed a significant decline in its shares following the publication of an article by the Argentine news outlet Infobae. The article claimed that the Argentine government was conducting an investigation into the fintech company, suspecting a possible fraud amounting to at least $400 million.
Citing undisclosed official sources, Infobae reported that the investigation focused on alleged “improper maneuvers” and transfers abroad, which were believed to constitute fraudulent activities. Infobae’s article further suggested that dLocal mainly makes money by offering services to its own related companies. It’s suggested that this setup is used to take advantage of differences in exchange rates and move money overseas without following proper accounting practices.
Infobae also mentioned that sources at Argentina’s customs agency were thinking about reporting dLocal to the U.S. Securities and Exchange Commission (SEC) for more investigation.
In response to these allegations, dLocal promptly issued a statement denying the accusations, asserting that it had fallen victim to “misleading allegations.” The company emphasized its commitment to conducting regular payment processing operations in Argentina without interruption.
Sergio Fogel, the founder of dLocal, expressed surprise at the allegations in an interview with Uruguayan newspaper El Observador. He stated that the company’s legal team had thoroughly checked official records and found no evidence of such a case.
The consequences of these allegations were reflected in dLocal’s stock performance. During afternoon trading, the fintech company’s shares experienced a 17% decline, following an earlier drop of over 34% on the same day. This decline adds to the existing pressure on dLocal’s stock, which had already been impacted by previous allegations of fraud made by short-seller Muddy Waters back in November. The current stock value is far below its worth from a year ago.