Muddy Waters Research founder Carson Block has renewed his firm’s bearish stance on SoFi Technologies Inc. (NASDAQ: SOFI), citing accounting practices he describes as operating in a legal gray area.
Speaking on “The Meb Faber Show” podcast, Block said SoFi remains one of the most compelling short ideas his firm has identified in the current market environment.
Block’s latest remarks follow Muddy Waters’ earlier allegations this year that SoFi used “Enron-esque off-balance-sheet structures” to mask debt and inflate revenue, claims SoFi denied at the time.
SoFi previously stated its disclosures comply with U.S. GAAP and SEC requirements, though the company was not immediately available to respond to Block’s most recent comments.
Central to the short-seller’s concerns is SoFi’s use of fair value options to account for its loan portfolio, a practice that allows companies to record financial assets at current market price rather than historical cost.
Block alleged that while a typical bank would mark a loan down to provision for losses before marking it up over time, SoFi immediately records a higher value, potentially listing a $100 loan at roughly $108 or $109.
“It’s bleeding edge financial engineering,” Block said, adding that “until this year, it was the only bank that I could identify that with at least $20 billion in assets that was using a particular type of accounting for its loans and for substantially all of its loans.”
Block also claimed SoFi failed to disclose how it was financing certain loans, saying the firm appeared to be “lending 80-90% of the purchase consideration” on loans yielding around 13%, discovered at approximately 5%.
He alleged that SoFi did not disclose that its secured lending program financed purchases of its own personal loans, and that the SEC later sought additional disclosures on the matter.
Regarding a specific transaction, Block said, “It wasn’t a loan sale,” arguing that the $312 million involved was a transfer to a consolidated subsidiary, with JPMorgan lending money to that subsidiary to send funds back to SoFi.
“SoFi is claiming, no, we actually sold the entity to JPMorgan. Now, that appears to be very misleading,” Block said, characterizing the structure as raising serious questions about the integrity of the reported transaction.
Block warned that if the accounting treatment were disallowed, “pulling that linchpin would force a restatement of, like, a billion dollars of previously reported EBITDA,” describing the transactions as supporting an “upside down pyramid” of model-driven gains.
He also alleged that management profited from the arrangements by entering into forward agreements, allowing executives to “take over $50 million off the table” while technically retaining stock ownership.
While acknowledging he did not have the complete picture and the transactions could still be legal, Block said they would likely be “just on the right side of the line, if it is.”
Block added that he hopes “somebody pries this open from the regulatory perspective,” signaling his expectation for increased scrutiny of SoFi’s financial disclosures.
On Stocktwits, retail sentiment around SOFI was listed as “bearish” amid normal message volumes, with one user commenting, “Feel sorry for the longs that seem to have unlimited hope here.”
Despite bearish sentiment, retail interest has remained elevated, with SOFI’s Stocktwits follower count surging more than 14% over the past year and message volume rocketing over 1,000% in the past month alone.
SOFI stock is down approximately 38% so far this year, on track for its worst annual performance since 2022, weighed down in part by a 27% drop in technology platform revenue following the exit of a major client before the end of 2025.
