AppLovin demands short-seller CapitalWatch retract 'conspiratorial' report

AppLovin has taken a firm stand against a recent report published by short-seller CapitalWatch, sending a cease and desist letter on Monday. The tech company accused CapitalWatch of making defamatory claims, stating their report paints AppLovin as a 'digital laundromat' for criminal enterprises, a characterization the company vehemently denies. In the letter, AppLovin criticized the findings of the 35-page report as nothing more than 'conspiratorial musings,' asserting that it contains numerous false statements regarding the company's operations. The company demanded that CapitalWatch retract its report and any subsequent statements that could further damage AppLovin's reputation. CapitalWatch previously alleged that it had identified 'systemic compliance risks and suspicions of major financial crimes' related to AppLovin's financial structure. The report also raised concerns regarding the connections between Hao Tang, a significant shareholder in AppLovin, and Chen Zhi, the chairman of the Cambodia-based Prince Group, who faces serious legal troubles, including charges of wire fraud and money laundering. The U.S. Department of Justice has taken action against Chen Zhi, seizing approximately $15 billion in bitcoin linked to him, while the U.S. Treasury Department has classified Prince Group as a 'Transnational Criminal Organization.' CapitalWatch's report suggested that the ties between Tang and Zhi implicate them in a broader criminal network. In response, AppLovin clarified that it does not engage with the Prince Group or any of its affiliates. The company emphasized that CapitalWatch failed to provide any evidence supporting its claims. Notably, in 2022, Prince Bank, part of Prince Group, collaborated with WOWNOW, a leading Cambodian super app, for their online payment solutions. The cease and desist letter also instructed CapitalWatch to retain all documentation related to its claims about AppLovin. This is not the first instance of scrutiny for AppLovin, as it has faced similar allegations from other short-sellers such as Muddy Waters and Fuzzy Panda. Recently, Fuzzy Panda called for AppLovin's exclusion from the S&P 500 Index, reiterating accusations of fraudulent advertising practices. AppLovin's CEO, Adam Foroughi, has consistently refuted these allegations, expressing disappointment at what he describes as the malicious tactics of short-sellers aimed at harming the company's market position for their benefit.