AI Darling to Crime World Laundromat? AppLovin Tanks on Short-Seller’s Bombshell Report

Core Viewpoint - AppLovin's shares have dropped significantly following allegations of enabling money laundering through connections with Asian criminal networks, as reported by CapitalWatch [2][4]. Group 1: Allegations and Financial Impact - CapitalWatch's report claims that major shareholders utilized AppLovin's advertising tools to launder billions in illicit funds from China and Southeast Asia [3][4]. - Following the report, AppLovin's stock fell 15% over three trading sessions and is down an additional 8% in premarket trading, reaching approximately $528 per share [3][7]. - The report links illegal funds to around 6.67 billion yuan from China's Tuandaiwang platform and revenues from Southeast Asian scams [4]. Group 2: Operational Insights - The report describes a "Mobius Loop" system where criminal groups pay for ads through intermediaries, converting illicit money into legitimate revenue using AppLovin's AXON algorithm and Array software [5]. - Allegations include that AppLovin's algorithms facilitate the distribution of gambling and scam apps, targeting vulnerable users [6]. - There are claims of a hidden team in mainland China managing U.S. user data, which could attract regulatory scrutiny despite the CEO's downplaying of operations in China [6].