XP Inc. Sues Grizzly Research for Defamation, Alleging “Ponzi Scheme” Claims Caused $100M in Damages
Brazilian fintech firm XP Inc. has launched a defamation lawsuit in U.S. Federal Court against Grizzly Research, alleging that a report accusing the company of operating a “Ponzi scheme similar to Madoff” caused over $100 million in damages. The complaint, filed Monday in the Southern District of New York, marks a significant escalation in the dispute between the two firms.
XP Inc. Alleges Deliberate Market Manipulation
According to the lawsuit, Grizzly Research and its owner, Siegfried Eggert, published a report on March 12 that was described as “brazen, mischievous and reckless.” XP Inc. contends the report was intentionally designed to drive down the price of its stock, allowing Grizzly Research to profit from short positions. The company asserts that the allegations are false and have already led to withdrawals of funds from long-standing customers, investors, and commercial partners.
“The accusations leveled by Grizzly Research are demonstrably false and have had a severe impact on our business and reputation,” a senior official stated.
Grizzly Research’s Allegations Detail Alleged Scheme
The report by Grizzly Research alleged that XP Inc.’s purported Ponzi scheme involved the sale of derivatives to retail customers, which were then channeled through special funds and misrepresented as beneficial owner trading. Grizzly Research further claimed the scheme “probably implied nefarious activities” and that XP Inc. would not be profitable without it.
XP Inc. Denies Claims, Cites Legal Compliance
XP Inc. vehemently denies the allegations, stating that the claims regarding its funds Gladius and Coliseu are “clearly false.” The company maintains that these funds are owned internally and do not have external investors, and that all transactions complied with applicable Brazilian law.
Market Reaction and Legal Action
Following the release of the report on March 12, XP Inc. shares dropped 5.5% to $14.14 in New York. On Monday, the stock closed at $19.48, down 32 cents. The lawsuit seeks unspecified compensatory and punitive damages.
The case is XP Inc. et al v. Grizzly Research LLC et al, U.S. District Court, Southern District of New York, No. 25-05564.
Short Selling and Defamation Lawsuits
The lawsuit highlights the risks associated with short selling, a practice where investors borrow shares hoping to repurchase them at a lower price. Other firms engaged in short selling have faced similar defamation lawsuits in the United States.
Attempts to reach Grizzly Research for comment were unsuccessful. The firm could not be reached by phone or email, and its website did not accept messages requesting comment. Lawyers for XP Inc. did not immediately respond to requests for additional information, and the company’s press office in Brazil declined to comment.
The outcome of this case could have significant implications for both XP Inc. and the broader fintech industry, particularly regarding the scrutiny of investment practices and the potential for reputational damage from research reports.
