Shares of Block plunged nearly 15 percent on the day, and Dorsey's net worth took a $562 million hit, dropping 11 percent to $4.4 billion, according to the Bloomberg Billionaires Index, reports Daily Mail.

In its report, the research firm said: "Our 2-year investigation has concluded that Block has systematically taken advantage of the demographics it claims to be helping. The 'magic' behind Block’s business has not been disruptive innovation, but rather the company’s 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."

The group said its research involved dozens of interviews with former employees, partners, and industry experts, extensive review of regulatory and litigation records, and FOIA and public records requests."

"Our research indicates, however, that Block has wildly overstated its genuine user counts and has understated its customer acquisition costs. Former employees estimated that 40%-75% of accounts they reviewed were fake, involved in fraud, or were additional accounts tied to a single individual," read the research.

"In sum, we think Block has misled investors on key metrics, and embraced predatory offerings and compliance worst-practices in order to fuel growth and profit from facilitation of fraud against consumers and the government," read the website.

"We also believe Jack Dorsey has built an empire—and amassed a $5 billion personal fortune—professing to care deeply about the demographics he is taking advantage of. With Dorsey and top executives already having sold over $1 billion in equity on Block’s meteoric pandemic run higher, they have ensured they will be fine, regardless of the outcome for everyone else," it said.

Block fires back:

Block fired back in a statement to DailyMail.com, saying it would explore legal action against the short seller for its 'factually inaccurate and misleading report' that was 'designed to deceive and confuse investors'.

"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 added.

The company further said: 'We will not be distracted by typical short seller tactics"