The last week will be a new one in the history of the Uruguay’s first unicorn, dLocalin what has been a complex year for the technology company since that Black Wednesday in November 2022, when a lapidary report from Muddy Waters Capital placed the label of “fraud” on the company. The most recent event finds her at odds with the Argentine government, which is facing an investigation for alleged triangulation of funds and possible fraud.
On Friday of last week, at the end of May, the Argentine press reported on an event that set off all the alarms in dLocal: the local government was analyzing the possibility of filing a complaint with the Securities and Exchange Commission (SEC)the regulator Wall St. There began a new headache for the Uruguayan unicorn, which still has not managed to recover the losses caused by the collapse of its shares in November, despite two great quarters in terms of earnings and the support of important technology funds such as General Atlantic, Tiger Global and D1.
The complaint
The complaint against dLocal was made by the Argentine prosecutor Guillermo Marijuanwhich accuses the company of leaking foreign currency through a overbilling of digital services. Although the cause remains protected under summary secrecy, the estimates revolve around 400 million dollars that would have escaped abroadTherefore, the crime would fall into the category of “fraud” or “scam”.
Initially, there was talk that Argentina would request information from the United States Treasury already Homeland Security Investigations for the whereabouts of the money in question which, according to the suspicions of the neighboring country, had been transferred to other countries through maneuvers not reflected in the company’s accountingin order to take advantage of the exchange gap and avoid the obligation to liquidate foreign currency from the export of services.
With the confirmation of the Argentine Minister of Economy, Sergio Massa, that the country will litigate against dLocal in the United States, it was learned that the triangulations are carried out towards Uruguay and towards the state of Florida, in the North American country. For this reason, the official asked the attorney general edward casal that, through a legal study of NY, file a complaint with the SEC, as well as with the North American financial information unit (FINSEN).
dLocal’s Defense
As soon as the news of the possible complaint broke, one of the founders of dLocal, Sergio Fogel, He denied the accusations of fraud to which, once again, the technology company was being subjected.
According to the businessman and well-known investor, The firm operates “with total normality” and he always gave the correct data in his accounting reports. “I don’t know where they get those numbers from,” he said last Friday, referring to the 400 million dollars that he allegedly fled from Argentina.
Likewise, dLocal issued an official statement in which it described the journalistic information as “inaccurate and misleading”while —at least until Wednesday— he had not received any “open case” from the Argentine Justice.
In this sense, they only confirmed that there is a information request by the authorities in Argentina, to which the payment processor must respond before June 6. “So far we have only received one request for information, which of course we will respond to in time,” Fogel said, noting that the company “strictly follows the regulations.”
The stock crash
Although it did not compare with the collapse of more than 51% of its shares in November, after the public complaint by Muddy Waters, after the Argentine line of action against the company became known, dLocal shares sank 17.32% on Friday. They closed the trading day at $11.41.
Likewise, the market capitalization experienced a setback and was close to 3,364 million dollars. In this regard, some market operators indicated that the company traded about 7 million dollars, well above the usual level, which is located at about 1.3 million dollars a day. When trying to explain this situation, they analyzed that it could be a rescue to mitigate the collapse.
Beyond this, they had a brief recovery: on Tuesday they had already restored 8.41% of the losses in the share price, which reached a price of 12.55 dollars. However, the rally was not sustained and, at the opening of the Wall Street stock market on Wednesday, the price was $11.96.
The problem did not end there, since stocks kept falling until touching a first minimum of 11.04 dollars in the morning of yesterday. And this morning, the new floor was $10.84; while the market capitalization is 3,228 million dollars.
Source: Ambito
