Short seller CapitalWatch has retracted allegations that a major shareholder in app marketing company AppLovin was linked to money laundering, sending AppLovin’s shares up more than 13%.
CapitalWatch had claimed last month that Hao Tang, one of AppLovin’s largest shareholders, had laundered illicit funds from China and Southeast Asia using AppLovin’s technology platforms. The short seller apologised today, saying it had erroneously connected Tang to sanctioned Cambodian conglomerate Prince Group.
“In light of these factual discrepancies—and to prevent the spread of misinformation and protect the legal rights of the parties involved—we have decided to remove and retract the passages relevant to Mr. Tang personally,” wrote CapitalWatch.
“Regarding the report’s references to ‘money laundering’ and ‘improper transfer of interests’, it is imperative to distinguish between individual liability and corporate financial phenomena”, it said.
“Our review concluded that while the macro data and transaction structures highlighted in the original report warrant market scrutiny, the information currently available is legally insufficient to attribute these complex capital operations directly and exclusively to Mr. Tang.”
CapitalWatch’s report had also alleged Tang was a “capital cleaner” for China-based peer-to-peer lender Tuandai.com, though it said today that the court documents it cited had been wrongly linked to Tang. Tuandai.com's founder was handed a 20-year prison sentence for illegal fundraising in 2022.
AppLovin had denied CapitalWatch’s assertions, saying “claims that AppLovin facilitated money laundering or its products are used for unauthorised downloads are patently false”. It sent a cease and desist letter demanding that CapitalWatch retract its report.
Despite retracting the allegations against Tang, CapitalWatch maintains its stance on “the complex financial structure of AppLovin”, it said.
Last year, short sellers Fuzzy Panda, Culper Research, and Muddy Waters Research also alleged AppLovin’s advertising software had violated app store policies and exploited consumer data.
AppLovin (NASDAQ: APP) closed 13.2% higher at $460.38, and climbed a further 4.7% in after-hours trading. Its market capitalisation is $155.59 billion.
