Prominent US short seller Hindenburg Research has bet against a Kazakh online brokerage for $4.6 billion.
The “Hindenburg”, the company that bet against the “Block” company of billionaire Jack Dorsey, “Carl Icahn”, the start-up company “Nikola” for the manufacture of electric cars, as well as the “Adani” group, and its reports caused the elimination of tens of billions of dollars.
While Freedom Holding Corp. was established in Moscow in 2008, before it later moved to Kazakhstan, and was listed on the Nasdaq Stock Exchange in 2019.
And after Russia invaded Ukraine early last year, US sanctions severed ties between US and Russian banks and companies. The company was forced to sell its business in Russia, according to CNBC, which was reviewed by Al Arabiya.net.
But according to a report from the Hindenburg on Tuesday, those ties remain solid.
“We found that Freedom continues to operate in the Russian market, and that the company has publicly violated sanctions along with anti-money laundering (AML) and know-your-customer (KYC) rules,” the company wrote.
After the report was published, Freedom Holding shares fell 3.3% on Tuesday. The Hindenburg report came a day after Freedom warned that Nasdaq notified the company of non-compliance for failing to file its quarterly earnings report for the period ended June 30.
In Freedom’s latest annual report, the company said revenue for the year ended March 31 was $795.7 million, an increase of more than 100% over the previous two years.
The Hindenburg claimed that at the heart of the company’s growth was evading sanctions, including from the US Treasury’s Office of Foreign Assets Control.
It also highlighted Freedom’s acknowledgment to the SEC that it “provided brokerage services to certain OFAC, EU, or UK sanctioned individuals and entities.” According to Hindenburg, the problems run much deeper.
The company said it learned through interviews with several former employees that client funds are being run from Freedom’s offices in Russia and Kazakhstan through a subsidiary incorporated in Belize – a Central American island and tax haven – and privately owned by the president. Freedom CEO. SEC filings show that the entity accounted for 60% of Freedom’s fee and commission income for the year ended March 31.
Freedom’s CEO, Timur Turlov, is one of the richest men in Kazakhstan, despite Ukraine’s sanctions for his financial ties to Russia.
Turlov is one of the businessmen who appeared in the former Soviet republics and who profited quickly during the era of Russian privatization in the wake of the dissolution of the Soviet Union in the 1990s, and they are called the Russian “oligarchy”.
A former senior Hindenburg executive alleged that Russian money laundering was rife. In terms of compliance standards, Hindenburg said the former employee described them as “literally nothing”.
“Just bring your money,” he said. “You won’t be asked about a source of income, a source of money. There are no KYC forms.” The best part about this is that anti-money and terrorist financing laws are violated in almost every country.
“I personally saw bags of $2.5 million in cash brought in by a customer,” the former employee said.
A Freedom spokesperson, who works for an offshore company in the US, told CNBC that Hindenburg’s allegations were “unfounded.”
“Freedom Holding and its affiliates continue to provide all required disclosures to regulators and investors, who can review them, in addition to audited financial statements on our website,” the spokesperson added.
Shares of Freedom have risen more than 8-fold since the end of 2018, largely undeterred by global conflicts. The company recorded net income of $205.6 million in fiscal year 2023, with about 79% of operations in Kazakhstan.