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App Labin sent a cease-and-desist letter to Capt.Watch on Monday, claiming that short sellers’ reports that the company “acts as a ‘digital laundromat’ for criminal organizations” are defamatory and baseless.
“Each of your ‘reports’ contains numerous absurd and demonstrably false statements about AppLovin,” the letter said, calling the findings “conspiracy-theoretic considerations.”
The letter asked Capital Watch to retract its 35-page report and subsequent statements released last week.
Short sellers wrote that they had uncovered “systematic compliance risks and suspicions of serious financial crimes” within the ad tech company’s capital structure.
CapitalWatch and AppLovin did not respond to requests for comment on the letter.
CapitalWatch claimed in a report that there was a close relationship between Hao Tang, AppLovin’s majority shareholder, and Chen Zhi, chairman of Cambodia-based Prince Group.
In October, the U.S. Department of Justice indicted Chen Zhi on charges of wire fraud conspiracy and money laundering conspiracy, and seized about $15 billion in Bitcoin from his cryptocurrency wallet.
On the same day, the U.S. Treasury Department designated the Prince Group as a “transnational criminal organization.”
Capital Watch argued that Mr. Tan and Mr. Ji’s relationships in the Hong Kong capital market and business operations in Southeast Asia “prove that they belong to the upper nodes of the same criminal group.”
“AppLovin does not work with Prince Group, WowNow, or any of their affiliates to the best of their knowledge or belief,” the company said in a letter to CapitalWatch. “Of course, you could not identify any evidence or support to suggest otherwise.”
In 2022, Prince Bank, a subsidiary of Prince Group, partnered with WOWNOW for online payments. WOWNOW is Cambodia’s largest “super app” offering food delivery, ride-hailing, and shopping services.
In its letter, AppLovin told short sellers to preserve all documents and communications related to the company.
CapitalWatch is the latest short seller to express concerns about AppLovin following critical reports from Muddy Waters, Fuzzy Panda and Calper Research last year.
In March, Fuzzy Panda asked the S&P 500 Index Committee to remove AppLovin from the benchmark index. The short sellers’ letter claimed that the company did not meet the S&P 500’s “gold standard” and reiterated previous allegations of deceptive advertising tactics.
AppLovin CEO Adam Followy denied past allegations by short sellers.
“It is unfortunate that a small number of nefarious short sellers are making false and misleading claims designed to undermine our success and depress our stock price for their own financial gain,” Forogi wrote in response to Fuzzy Panda and Culper’s February report.
