An investment research firm accused financial technology payment company Block of facilitating money laundering, fraud, and scams on its platform.

Hindenburg Research, a noted short seller, released a report Thursday on Block (formerly Square) backed by two years of research and interviews with former Block employees and partners. The investigative report alleged the company’s claimed disruptive innovation of the payments industry has been fueled by its “willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics.”

Block’s “‘Wild West’ approach to compliance” on its Cash App platform has “made it easy for bad actors to mass create accounts for identity fraud and other scams, then extract stolen funds quickly,” according to the report.

Even when Block caught a user engaging in fraud on Cash App, the company blacklisted the account without banning the user, the report said. The same user could create multiple duplicate accounts and continue perpetrating fraud on the Block platform without consequences, the report said.

Former Block employees allegedly told Hindenburg the company “suppressed” internal concerns and user pleas for help regarding fraud and scams perpetrated on Cash App. “This appeared to be an effort to grow Cash App’s user base by strategically disregarding anti-money laundering (AML) rules,” the report said.

Block’s platform also allowed Covid-19 relief funds to flow to fraudsters and was used by criminals to process payments for sex trafficking, Hindenburg alleged.

In response, Block said in a press release it is working with the Securities and Exchange Commission (SEC) and might explore legal action against Hindenburg for “the factually inaccurate and misleading report they shared about our Cash App business.”

“Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price,” the company said. “We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors.”

Hindenburg’s business model involves using negative reports to drive down the stock price of the targeted company. The research firm buys short positions on stocks it believes to be overvalued and stands to benefit financially when that company’s stock loses value. Block’s stock value dropped from $72.65 Wednesday to $58 at the start of trading Thursday morning, although it has rebounded slightly since then.

Hindenburg’s previous investigative reports on electric truck startup Nikola, Clover Health, and Indian conglomerate Adani Group have contributed to a fall in their respective stock prices. A follow-up investigation by the SEC discovered fraud at Nikola, and the company was fined $125 million. Clover Health was also subject to an SEC investigation following Hindenburg’s reporting, while Adani lost $47 billion in market value earlier this year, the Wall Street Journal reported.