XP(US:XP) Prnewswire·2025-04-08 13:09Core Viewpoint - XP Inc. is facing serious allegations of operating a Ponzi scheme, leading to a significant decline in its share price after a report was published by Grizzly Research, which claims that the company's profits are unsustainable and dependent on misleading financial practices [1][3]. Group 1: Allegations and Investigations - A report titled "XP's Entire Profits Are Dependent on What Insiders Call a 'Madoff-Like Ponzi Scheme'" was published by Grizzly Research, causing XP's share price to drop over 5% [1][3]. - Hagens Berman, a prominent investor rights firm, is investigating the allegations against XP and is encouraging affected investors to come forward with their losses [1][2]. - The investigation is focused on the accuracy of XP's statements regarding its business model and its claims of improved internal controls over financial reporting [2][3]. Group 2: Specific Claims from the Report - The Grizzly Research report alleges that XP is running a Ponzi scheme through certain derivatives sales to retail clients, misrepresenting these as proprietary trading profits [5]. - A fund called GLADIUS FIM CP IE, which reportedly returned over 2,419% over the last five years with low volatility, is central to these allegations, suggesting that without this fund, XP would be unprofitable [5]. - The report indicates that the profitability of Gladius is tied to a product called COE (Certificado de Operações Estruturadas), which XP aggressively markets to Brazilian retail clients [5]. - Former employees have claimed that the scheme relies on continuous inflows from COEs, and if these inflows cease, XP could face significant financial obligations it cannot meet [5].