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AppLovin Moves to Defend Its Reputation

Mobile advertising technology company AppLovin has formally demanded that short-selling firm CapitalWatch retract a recently published report that accused the company of operating as a so-called “digital laundromat” for criminal syndicates.

In a cease-and-desist letter sent Monday, AppLovin described CapitalWatch’s claims as “defamatory, baseless, and demonstrably false,” arguing that the report relied on speculation rather than evidence. The company also instructed CapitalWatch to preserve all documents and communications related to AppLovin, signaling the possibility of further legal action.

The dispute centers on a 35-page CapitalWatch report released last week, which alleged systemic compliance failures and raised suspicions of major financial crimes within AppLovin’s ownership structure.

What CapitalWatch Alleged

CapitalWatch claimed it uncovered what it described as “systemic compliance risks” tied to AppLovin’s shareholders and international business connections.

A central assertion in the report focused on Hao Tang, a significant AppLovin shareholder, and his alleged relationship with Chen Zhi, chairman of Cambodia-based Prince Group. According to CapitalWatch, overlapping business activities in Hong Kong capital markets and Southeast Asia suggested that Tang and Zhi were part of the same criminal network.

The short seller went further, alleging that these relationships effectively positioned AppLovin as a conduit for illicit financial flows.

Neither CapitalWatch nor AppLovin responded to media requests for comment specifically regarding the cease-and-desist letter.

AppLovin Flatly Denies Any Connection to Prince Group

AppLovin categorically rejected all allegations tying it to Prince Group, WowNow, or any related entities.

“AppLovin does not work with the Prince Group, WowNow, or—to its knowledge or belief—any affiliates thereof,” the company wrote in its letter. It also criticized CapitalWatch for failing to provide concrete proof to support its claims.

CapitalWatch referenced a 2022 partnership between Prince Bank (owned by Prince Group) and WowNow, Cambodia’s largest super app offering food delivery, ride-hailing, and e-commerce services. However, AppLovin stated that it has no business relationship with these organizations and that CapitalWatch’s conclusions were based on conjecture.

The company characterized the report as a collection of “conspiratorial musings” rather than substantiated findings.

Broader Legal Context Fuels Controversy

The allegations gained traction partly because of recent U.S. government actions involving Prince Group leadership.

In October, the U.S. Department of Justice charged Chen Zhi with wire fraud conspiracy and money laundering conspiracy, announcing the seizure of approximately $15 billion in bitcoin from cryptocurrency wallets linked to him. On the same day, the U.S. Treasury Department designated Prince Group as a “Transnational Criminal Organization.”

CapitalWatch cited these developments as part of its rationale for scrutinizing AppLovin’s shareholder relationships. AppLovin, however, emphasized that none of these actions involve the company and that no evidence connects its operations to Prince Group’s legal troubles.

AppLovin Faces Renewed Pressure From Multiple Short Sellers

CapitalWatch is the latest in a growing list of short sellers to publish critical research on AppLovin.

Over the past year, firms including Muddy Waters, Fuzzy Panda, and Culper Research have all released reports questioning the company’s advertising practices, compliance standards, and growth sustainability. These reports have periodically triggered volatility in AppLovin’s share price and intensified investor scrutiny.

In March, Fuzzy Panda went a step further by urging the S&P 500 Index Committee to exclude AppLovin from the benchmark index, arguing that the company failed to meet what it described as the index’s “gold standard.” That letter reiterated earlier claims of fraudulent advertising tactics and opaque business practices.

Management Pushes Back on Short-Seller Narrative

AppLovin CEO Adam Foroughi has repeatedly rejected accusations made by short sellers, framing them as financially motivated attempts to pressure the stock.

Following reports from Fuzzy Panda and Culper earlier this year, Foroughi stated that “a few nefarious short-sellers” were spreading misleading information to benefit from declines in AppLovin’s share price.

The company continues to maintain that its advertising platform complies with applicable regulations and that its business model is transparent to partners, regulators, and investors.

What This Means for Investors and the Ad-Tech Sector

The escalating dispute highlights the growing influence of activist short sellers in shaping market narratives, particularly in high-growth technology sectors like mobile advertising.

For AppLovin, the situation adds another layer of uncertainty at a time when investors are already closely watching regulatory risks, data privacy rules, and monetization practices across the digital advertising industry. With multiple short sellers now targeting the company and legal tensions rising, market participants are likely to monitor developments closely for any signs of regulatory involvement or litigation.

As AppLovin pushes back forcefully against CapitalWatch, the episode underscores a broader trend in corporate America: companies are increasingly willing to confront short sellers directly when allegations threaten brand credibility, shareholder confidence, and long-term valuation.

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