The government is investigating the only Uruguayan unicorn for alleged fraud against the government and condemning and analyzing it in the United States

Technology companies that reach a market capitalization of more than USD 1,000 million are called It is also the only Uruguayan company listed on Wall Street. Previously accused of fraudulent activities, fintech dLocal is now being investigated by the Argentine government for improper manipulations in the foreign exchange market and money transfers made abroad for the purpose of “flying foreign currency”. According to official sources, the maneuvers, which directly constitute a fraud, consist of 400 million US dollars. infobae.

“This company acts only as a tool to take advantage of the exchange rate gap and to take dollars abroad with activities that are not reflected in the accounting. In its balance sheet, it practically does not have fixed assets and only declares the rent from the address where they operate,” they told this media from the government.

“It receives invoices from abroad from its parent company, issues B invoices to foreign customers to justify income and issues invoices to companies within the same group. When creating these types of invoices, it avoids liquidating foreign currency from the export of these services,” they explained.

Customs resources, command control system William Michaelindicated that they are evaluating reporting the alleged fraud to Securities and Exchange Commission (SEC), the Wall Street regulator, through the US Embassy in Buenos Aires. They will seek information through FinCEN, the US Treasury’s Financial Crimes Enforcement Network and Homeland Security Investigations (HSI) to establish the beneficial owners of the transfers and determine the route of the money out of Argentina.

Apart from Customs, the Central Bank, Ministry of Commerce, AFIP and Financial Crimes Unit (UIF) are also involved in the investigation.

The company is based in Malta, has a market capitalization of around USD 4,000 million and its local operation is “full of activity. An inter-company entity“, according to local authorities. In other words, it sells services to itself. “98% of their income comes from services provided to dLocal Corp. LLP and dLocal LTD. Currency exchanges are mainly Malta and Great Britain and the main beneficiaries are dLocal Corp. LLP, dLocal Limited and dlocal LLP” explained.

As this media learned, AFIP sent a request on May 19 to the address of dLocal Argentina SA, the first site at 1600 Thames Street in the heart of Palermo Soho. “That first site was not properly identified from the outside … and did not look like a corporate address,” official sources said.

According to this requirement, the company must provide details of requests for foreign transfers to import services made in 2022 (date, amount, recipient, country, etc.) and documents proving these requests (invoices and contracts with recipients). . The five working days they gave him to submit the documents are yet to expire.

dLocal is dedicated to providing cross-border payments that connect global merchants to emerging markets and has offices in cities such as Montevideo, Sao Paulo, San Francisco, London and Tel Aviv (in addition to the redoubtable Buenos Aires office). It offers global electronic payment services and claims to have clients such as Zara, Amazon, Nike, Dropbox, Booking and Tripadvisor, among others.

“dLocal was born with a mission: to close the payment innovation gap that exists between developed and emerging economies. We are 40% cross-border payment facilitator, 40% technology company and 40% emerging market localization specialists. That means unlocking new revenue and increasing reach in emerging markets. We are 120% dedicated to providing a comprehensive and flexible payment solution,” they say on their website with dubious math.

He is the Chairman and COO of the company James Singer and CEO Sebastian Kanovich, both Uruguayans. According to public information, Singer moved to Cape Town, South Africa last year to lead the company’s development in Africa.

In mid-May, the company presented results for the first quarter of the year. It had operating volume of USD 3.6 billion and revenue of USD 137 million, representing year-on-year growth of 57% and 16%, respectively, compared to the same period of the previous year.

“Latin America grew 27% in the first quarter of 2022 and 6% quarter on quarter to $98.2 million, accounting for 72% of total revenue. In the first quarter of 2023, Argentina grew 41% quarter on quarter, although at a slightly lower level than a year ago,” the results said. The report says.

A few months ago, in last year’s third quarter results presentation, Kanovich It told investors: “The Argentine government temporarily changed the conditions for accessing the foreign exchange market for importing certain goods and services, which negatively affects our Argentine cross-border volumes. The situation has improved during the quarter”.

“Despite challenges in accessing foreign exchange markets in Argentina, we delivered solid revenue growth of 55% year-over-year,” the company said three months later.

According to Argentine authorities investigating dLocal, payments for services abroad “grew exponentially from 2019 to 2022, rising from 9 million US dollars in 2019 to 400 million dollars in 2022. Last year, 60% more than the amount paid abroad. 2021”.

In November 2021, dLocal’s shares fell more than 50% on Wall Street following a high-profile report by hedge fund Muddy Waters, which spoke about the company’s creative accounting and outright accused it of fraud.

Therefore, the CEO and owner of an investment firm, Carson BlackHe told a financial conference in London that he had entered a short stock market position — meaning he was betting that Uruguay’s value would fall due to warning signs in its accounts.

“If these were really serious people who wanted to run a company that was paying for the long term, they wouldn’t have sold $1 billion in stock in the first five months of the company’s IPO,” Black said. “So dLocal prides itself as an outlier, and yes, they have higher margins and faster growth than others. How do they do that?” asked the controversial block.

Muddy Waters said it found a $3.3 million shortfall in the company’s ability to fund dividends for the company, which trades as DLO. It also says Malta has a shortfall of $4.1 million to finance cash use.

The agency said the Muddy Waters report contained “numerous misstatements, unsubstantiated claims and speculation.”

Now you also need to answer questions about your business in Argentina.

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