AppLovin (APP) Stock: Shares Sink on Money Laundering Allegations from CapitalWatch

TLDR

• AppLovin stock dropped about 5% in premarket trading after CapitalWatch published a report alleging money laundering operations
• CapitalWatch claims primary shareholder Hao Tang and networks bypassed AML controls to move funds from China and Southeast Asia into U.S. markets
• The report calls AppLovin “the ultimate monument to 21st-century new-type transnational financial crime”
• This follows previous short reports from Fuzzy Panda and Culper Research in February 2024 alleging data exploitation practices
• SEC and state regulators were already investigating AppLovin’s data collection practices as of October

AppLovin shares fell approximately 5% in premarket trading on Tuesday following a damaging report from financial research agency CapitalWatch. The report makes serious allegations about the company’s business operations and funding sources.

AppLovin Corporation, APP

CapitalWatch released findings from what it describes as a forensic investigation into AppLovin Corporation. The research agency claims primary shareholder Hao Tang and associated networks may have circumvented global anti-money laundering controls. According to the report, these parties allegedly moved funds from China and Southeast Asia into U.S. capital markets.

The report uses stark language to describe AppLovin’s alleged role. CapitalWatch called the company “the ultimate monument to 21st-century new-type transnational financial crime.” The authors further claimed that “AppLovin serves as the ultimate exit for asset laundering/diversion by transnational criminal kingpins.”

CapitalWatch alleges that AppLovin’s advertising business growth stems partly from illicit cryptocurrency funds routed through its platform. These are serious accusations against a publicly traded company.

AppLovin did not immediately respond to requests for comment from Sherwood News. The company has not issued a public statement addressing the CapitalWatch allegations.

Not the First Time Under Scrutiny

This report represents the latest in a series of questions raised about AppLovin’s business practices. The company has faced previous allegations from short sellers and regulatory investigations.

In February 2024, two research firms announced short positions in the adtech company. Fuzzy Panda Research and Culper Research both published reports targeting AppLovin. These reports alleged “systematic exploitation of app permissions” and claimed the company was taking data and gaming the advertising platforms of other tech companies, particularly Meta.

The earlier allegations focused on operational practices rather than financial crimes. However, they still raised concerns about how AppLovin conducted its business.

By October, reports emerged that the SEC had opened an investigation into AppLovin’s data collection practices. Multiple state regulators were also examining the company’s operations. These investigations were ongoing when the CapitalWatch report was published.

The CapitalWatch allegations represent a different category of accusation entirely. Money laundering and bypassing anti-money laundering controls are serious financial crimes. These claims go beyond business practice concerns to allege systematic criminal activity.

AppLovin operates as a publicly traded entity in the United States. This status subjects the company to regulatory oversight from the SEC and other government agencies. Public companies face regular audits and disclosure requirements that private firms do not.

The timing of the CapitalWatch report comes while AppLovin already faces regulatory scrutiny. The company must now contend with both the existing SEC investigation and these new allegations from CapitalWatch.

The stock market reaction shows investor concern about the allegations. A 5% premarket decline represents a substantial move for a company of AppLovin’s size. Shares traded at $541.99, down 6.25% from the previous close.