Shares of Block (SQ:US) have traded sharply lower in recent days after short-seller Hindenburg Research published a report noting that the fintech company misled investors with "inflated metrics."

According to Hindenburg Research, Jack Dorsey’s Block has "systematically taken advantage of the demographics it claims to be helping."

The company has been successful due to its  "willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics," Hindenburg said.

One of the short seller’s key points is that the company tends to overstate the number of users.

"The company's 'Wild West' approach to compliance made it easy for bad actors to mass-create accounts for identity fraud and other scams, then extract stolen funds quickly." 

Block responded by saying it intends to “work with the SEC and explore legal action against Hindenburg Research for the factually inaccurate and misleading report they shared about our Cash App business.”

As a result, Block shares tumbles on Thursday before the selloff continued on Friday as analysts argued that Block could have responded with a stronger voice. 

This week’s plunge in SQ stock has now erased all year-to-date (YTD) gains for the fintech business.

Looking at Capitol Trades’ data, we see that several Congress members were trading SQ shares lately, including Josh Gottheimer, Ron Wyden, Jim Langevin, and Ro Khanna.

Most notably, Rep. Langevin invested between $50,000 and $100,000 in Block in early November, shortly after shares hit fresh 2-year lows.