Figure Tech Accused of Blockchain Fraud by Short-Seller

Short-Seller Alleges Misrepresentation

Morpheus Research, a short-seller firm, has accused Figure Technologies of fundamentally misrepresenting its use of blockchain in its home equity lending operations. A report released by the firm claims the $7.7 billion fintech company does not originate loans on the blockchain, contrary to its public statements.

Morpheus Research disclosed that it holds short positions in Figure Technologies.

Report Highlights Contradictions

According to the research, Figure's own SEC filings state its Loan Origination System does not rely on blockchain technology and uses traditional documentary processes. The report also highlights that Figure’s 90-plus day delinquency rates were twice as high as similar loan pools from competitors like Rocket Mortgage and Spring EQ in 2024.

Governance and Performance Concerns

The report questions the independence of Provenance Blockchain, noting over 65% of its governance token is owned by Figure, its affiliates, and co-founder Mike Cagney. Furthermore, Mr. Cagney has reportedly sold $64 million worth of stock since the company's IPO without making any purchases, raising concerns about insider confidence.

Summary

These allegations from Morpheus Research challenge the core of Figure's technological claims and operational integrity. The fintech firm's market position and investor confidence may be significantly impacted pending its official response and any potential regulatory review that may follow.

FAQ

Q: What is Figure Technologies accused of?
A: The company is accused of misrepresenting its use of blockchain technology in its home equity loan business and having higher-than-average loan delinquency rates.

Q: Who published the report against Figure?
A: The short-seller firm Morpheus Research, which holds a short position in the company's stock.

Source: Investing.com