Freedom Holding accused of helping Russians evade sanctions, says Hindenburg Research

Hindenburg Research, a well-known short seller that has previously targeted Jack Dorsey’s Block, Carl Icahn, and electric vehicle startup Nikola, has set its sights on Freedom Holding Corp., a $4.6 billion online brokerage based in Kazakhstan.

Freedom Holding Corp. was originally founded in Moscow in 2008 before relocating to Kazakhstan and being listed on the Nasdaq in 2019. However, according to a recent report from Hindenburg, the company still maintains significant ties to the Russian market and has engaged in activities that violate sanctions and anti-money laundering rules.

In response to the report, shares of Freedom Holding Corp. fell approximately 3.3% on Tuesday. This came shortly after the company received a noncompliance notice from Nasdaq for failing to submit its quarterly earnings report.

Hindenburg’s report highlights Freedom Holding Corp.’s history of sanctions evasion, particularly from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). The report also raises concerns about the company’s compliance standards, with former employees alleging that money laundering was rampant and compliance measures were virtually non-existent.

The report further reveals that client funds were funneled through a Belizean entity owned by Freedom Holding Corp.’s CEO, Timur Turlov. This entity represented a significant portion of the company’s fee and commission income.

The establishment of the Belize entity coincided with the U.S. sanctions imposed on Russia in 2014, which posed challenges for Freedom Holding Corp.’s business operations. The company’s SEC filings from that year indicate that the Belize entity was created to facilitate easier access to the U.S. securities markets.

Freedom Holding Corp. denies the allegations made by Hindenburg, stating that it has provided all required disclosures to regulators and investors. The company’s recent financial statements can be reviewed on its website.

Despite these controversies, Freedom Holding Corp.’s shares have experienced significant growth in recent years. The company reported a net income of $205.6 million in fiscal year 2023, with a majority of the revenue coming from operations in Kazakhstan.

Hindenburg Research, founded in 2018, is known for its detailed reports on companies and its short positions. The firm has previously targeted well-known figures such as Jack Dorsey, Carl Icahn, Gautam Adani, and Trevor Milton.

For more details on Hindenburg Research’s actions against Carl Icahn, watch the video below: