TLDR
- AppLovin shares dropped roughly 5% in premarket hours after CapitalWatch released a forensic investigation report
- The report alleges primary shareholder Hao Tang and networks circumvented anti-money laundering systems
- CapitalWatch claims illicit cryptocurrency funds flowed through AppLovin’s advertising business
- SEC has been investigating AppLovin’s data collection practices since October
- Short sellers Fuzzy Panda and Culper Research questioned the company’s operations in February 2024
AppLovin stock decreased about 5% during premarket trading Tuesday after financial research agency CapitalWatch released explosive allegations. The report centers on potential money laundering operations within the adtech company.
CapitalWatch conducted what it calls a forensic investigation into AppLovin Corporation. The research agency claims primary shareholder Hao Tang and connected networks may have sidestepped global anti-money laundering systems.
According to CapitalWatch, these parties allegedly funneled money from China and Southeast Asia into U.S. capital markets. The report uses strong language to characterize AppLovin’s alleged role in these operations.
The research agency labeled AppLovin “the ultimate monument to 21st-century new-type transnational financial crime.” CapitalWatch further stated the company “serves as the ultimate exit for asset laundering/diversion by transnational criminal kingpins.”
CapitalWatch’s allegations extend to AppLovin’s revenue streams. The report claims the advertising business grew partly through illicit cryptocurrency funds moving through the platform.
AppLovin has not released a public statement regarding the CapitalWatch report. The company did not respond to media inquiries about the allegations.
Regulatory Scrutiny Already Underway
AppLovin was already facing regulatory challenges before the CapitalWatch report emerged. The company has dealt with questions from both short sellers and government agencies.
Two research firms took short positions in AppLovin last February. Fuzzy Panda Research and Culper Research published reports alleging “systematic exploitation of app permissions.” The firms claimed AppLovin took data and manipulated advertising platforms operated by companies like Meta.
The SEC launched an investigation into AppLovin’s data collection methods by October. Multiple state regulators also began examining the company’s practices around the same time.
The CapitalWatch allegations differ from previous concerns. Claims of money laundering and anti-money laundering violations represent potential criminal activity rather than questionable business tactics.
Stock Performance and Corporate Structure
Shares traded at $541.99, representing a 6.25% drop from the prior close. The premarket movement indicates investor worry about the report’s claims.
AppLovin functions as a U.S. publicly traded company subject to SEC regulations. This structure means more oversight and disclosure requirements than private firms face.
The company now deals with multiple challenges at once. The existing SEC investigation continues while these new allegations from CapitalWatch add another layer of concern.
CapitalWatch examined fund movements and compliance frameworks in its investigation. The agency says it discovered evidence of systematic anti-money laundering control violations.
The report identifies networks tied to Hao Tang as sources of potentially illegal funding. CapitalWatch alleges these networks transferred money from Asian markets through AppLovin into U.S. financial systems.
AppLovin’s advertising technology allegedly acted as a channel for questionable cryptocurrency funds. The report suggests this activity boosted the company’s recent revenue performance.
Trading data from Tuesday morning showed clear investor response. The 5% premarket decline demonstrates market concern over CapitalWatch’s findings regarding AppLovin’s alleged compliance failures and potential involvement in financial crimes.
