A glimpse behind the short-selling storm: the money laundering chain from AppLovin to over a dozen U.S. stock companies

A whale sighting often indicates a massive object lurking beneath the water. Last week, a heavyweight report from short-selling firm Capitalwatch ignited Wall Street, accusing AppLovin of involvement in an international money laundering case. But even more astonishing is that Capitalwatch claims this mobile marketing giant is just the tip of the iceberg—tracking illegal funds originating from China’s failed P2P platform, Tuandaiwang, which are quietly flowing into a dozen publicly listed U.S. companies.

Tuandaiwang Illegal Funds Escape, a Whale Emerges

In fact, Capitalwatch’s short-selling campaign did not start with AppLovin. The primary goal of this specialized short seller was to trace a massive flow of funds—how billions of dollars in illegal money from Tuandaiwang were moving out of China.

According to Capitalwatch’s investigation, these illicit funds went through a carefully designed international money laundering chain: first transferred out of China via underground banks, then split into countless small transactions, structured through complex layers, and finally injected into the U.S. capital markets. In this extensive laundering network, AppLovin is just one node—Capitalwatch states they have uncovered connections between at least a dozen U.S. publicly listed companies and this network.

This is the core of the “whale” concept: on the surface, shorting AppLovin appears to be a compliance challenge against a single company, but in reality, it’s just the tip of the iceberg revealing a structured, international money laundering operation. In their latest in-depth analysis, Capitalwatch openly states: “AppLovin is just one piece of this massive money laundering puzzle, and our team is working around the clock to trace these leads.”

SEC, CFIUS Have Entered the Scene; Critical Evidence Becomes Key

Faced with market skepticism over the completeness of the evidence, Capitalwatch did not back down. Instead, they claim to possess highly confidential raw materials—these “nuclear-grade” pieces of evidence involve sensitive individuals, financial chains, and details of transnational criminal organizations. Due to legal risks and the safety of informants, these original documents have not yet been made public.

However, a key breakthrough has occurred: according to backend data screenshots provided by Capitalwatch, the U.S. Securities and Exchange Commission (SEC) and the Committee on Foreign Investment in the United States (CFIUS) have recently downloaded their full report. This indicates that, although they are currently maintaining a low profile, regulatory authorities have already stepped in.

Capitalwatch emphasizes that these materials have been formally submitted to U.S. regulators. Analysts note: “Regulatory processes may be slow, but once initiated, they will dismantle all false narratives.” This wording suggests that the investigation may still be in its early stages, with larger-scale regulatory actions on the horizon.

AppLovin Just the Tip of the Iceberg; Dozens of U.S. Companies Under Investigation

Capitalwatch’s core accusation logic is relatively straightforward: Hao Tang, the major shareholder of AppLovin, collaborated with Cambodian transnational crime boss Chen Zhi to establish a “digital ad laundering” channel. Specifically, illegal funds are first converted into advertising expenses via Cambodia’s super app WOWNOW, then flow into the AppLovin platform for “legitimate” transactions, and finally become USD assets through revenue sharing and stock appreciation.

But this is just the tip of the iceberg. Capitalwatch emphasizes that, besides AppLovin, at least a dozen other U.S. listed companies have obtained illegal funds from Tuandaiwang through similar “black money channels.” This means that once investigations deepen, a chain reaction could be triggered, with impacts far beyond current market expectations.

Additionally, Capitalwatch accuses AppLovin’s algorithms Array and AXON of objectively assisting in the distribution of gambling and scam apps, further intensifying allegations of compliance violations.

Short-term Stock Price Rebound Cannot Mask Risks; Compliance Issues Are a Time Bomb

It’s noteworthy that after the short-selling report was released, AppLovin’s stock price rose instead of falling. Capitalwatch anticipated this outcome. Analysts point out that a company with powerful algorithmic capabilities and exponential growth can indeed mount a strong capital counterattack, and short-term stock fluctuations often result from management mobilizing various resources.

However, Capitalwatch remains firm: short-term stock performance cannot conceal the authenticity of the evidence and the severity of the risks. Even if AppLovin’s management claims ignorance of money laundering facts, once the source of funds is proven to involve international crime, the company still faces enormous legal liabilities, fines, and even delisting risks.

More importantly, this incident serves as a wake-up call for the entire U.S. stock market’s compliance ecosystem. Investors and regulators need to recognize a harsh reality: capital markets should not become safe havens for dirty money. Companies that obtain funds through “gray channels” will ultimately face compliance crackdowns.

In its latest response, Capitalwatch reiterated: “This storm has only just begun, and the best is yet to come.” This is both a warning to the dozen or so other involved companies and a reminder to the entire U.S. stock market—once a whale surfaces, the full laundering chain will gradually come to light.