Capitalwatch Official Apology Statement! Withdraws Allegations of Money Laundering Connection Between AppLovin and Prince Group

Capitalwatch retracted its February 8th allegations against AppLovin shareholder Tang Hao, citing insufficient verification. On January 20th, it previously claimed that AppLovin was linked to money laundering with the Cambodian Prince Group. The firm also withdrew descriptions of Tang Hao’s relationships with the Bordeaux court, Chen Zhi, the Prince Group, Jinbei Group, Tang Jun, and Yang Zhihui, stating these claims lacked cross-verification from non-anonymous sources. They apologized but did not endorse AppLovin’s financial condition.

January 20th Short-Selling Report Sparks Market Turmoil

In response to the market attention triggered by the earlier short-sell report, research firm Capitalwatch issued a correction and apology on February 8th, announcing the withdrawal of specific allegations against AppLovin’s major shareholder Tang Hao. They stated that the content did not meet their standards for independent verification before publication. Such a public apology is rare among short-sellers, indicating that Capitalwatch faced significant legal or public pressure.

The January 20th report claimed that AppLovin (NASDAQ: APP), a U.S.-listed advertising data analysis company, had a shareholder structure, advertising revenue flow, and product usage highly related to the Cambodian Prince Group, a transnational criminal organization. It further alleged that AppLovin might be a money laundering outlet for the group, urging U.S. regulators to investigate. These accusations are extremely serious; money laundering is a federal felony. If proven true, AppLovin’s executives could face criminal charges, and the company might be fined billions of dollars or shut down.

The Prince Group is one of Cambodia’s most notorious criminal organizations, involved in online gambling, human trafficking, forced labor, and money laundering. Linking AppLovin to the Prince Group effectively accuses the company of being an accomplice to crime. Without sufficient evidence, such claims could constitute defamation and malicious short-selling, giving AppLovin grounds for legal action.

Following the report’s release, AppLovin’s stock experienced short-term volatility but then rebounded, even reaching new highs. This market reaction suggests investors did not fully believe Capitalwatch’s allegations or considered that even if some were true, the impact on AppLovin’s business model would be limited. As an advertising technology company, AppLovin’s core business is helping mobile app developers with advertising and monetization—an industry that is legal and widespread.

Five Specific Allegations Withdrawn by Capitalwatch

Tang Hao’s alleged connection to Bordeaux court rulings: Mislinked due to lack of independent verification

Tang Hao’s relationship with Chen Zhi: Not verified from non-anonymous sources

Tang Hao’s relationship with the Prince Group: Same as above

Tang Hao’s relationship with Jinbei Group: Same as above

Tang Hao’s connections to Tang Jun and Yang Zhihui: Same as above

A Delicate Position: Withdraw but Not Endorse

Regarding the claim that Tang Hao was associated with a Bordeaux court ruling, Capitalwatch stated that after internal review, the judicial document lacked sufficient independent verification and was incorrectly linked to Tang Hao personally. For the allegations about Tang Hao’s relationships with Chen Zhi, the Prince Group, Jinbei Group, Tang Jun, and Yang Zhihui, they said these descriptions did not meet their publication standards due to lack of cross-verification from multiple non-anonymous sources, leading to their withdrawal.

In their statement, Capitalwatch expressed sincere apologies for any potential reputational damage caused by removing all references to Tang Hao. The formal and comprehensive tone of the apology suggests legal pressure influenced this decision. If it were merely voluntary correction, it typically wouldn’t be so formal.

Regarding the previous implications of “money laundering” and “improper transfer of benefits,” Capitalwatch clarified that under U.S. financial crime laws, accusations against individuals require extremely high evidence standards, including clear subjective intent, complete and traceable fund flows, and a closed, continuous chain of evidence.

Their internal review concluded that, although publicly available information indicates some capital structures and transaction patterns warrant market attention, there is insufficient legal basis to directly attribute these capital operations solely to Tang Hao. They emphasized that the withdrawal was based on evidence principles, not denying the existence of structural phenomena in the market. This “withdraw but not endorse” stance reflects Capitalwatch’s attempt to balance acknowledgment of error with maintaining its short-selling narrative.

However, they also noted that this correction does not constitute an endorsement of AppLovin’s financial health. The firm stated it will continue to analyze publicly available data independently and, in upcoming reports like “Nine Questions for AppLovin,” will use financial statements and quantitative models to scrutinize certain “unexplained financial data.” This indicates that while they withdrew personal allegations, they remain skeptical of AppLovin’s corporate figures.

Reputation and Legal Risks for Short-Sellers

This incident is a major blow to Capitalwatch’s credibility. The business model of short-sellers depends on the accuracy and trustworthiness of their research. When they release reports, investors base decisions on them. If a report contains significant errors or malicious defamation, the short-seller could face lawsuits and regulatory penalties.

Historically, firms like Muddy Waters and Citron have had errors but generally maintain high accuracy, which sustains their operations. Capitalwatch’s mistake on such a critical allegation could lead the market to question and dismiss future reports. More seriously, AppLovin and Tang Hao might pursue legal action for defamation and stock manipulation, risking substantial damages.

For AppLovin, although this event caused short-term trouble, it could be beneficial long-term. The withdrawal and apology from the short-seller may serve as a partial vindication. If AppLovin chooses to pursue legal remedies, it could recover damages and send a warning to other malicious short-sellers. However, the unresolved “financial data skepticism” remains a concern; the company will need to improve transparency and explanation to dispel market doubts.

For investors, this case underscores an important lesson: do not blindly trust short-seller reports, even from reputable firms. Before making investment decisions, independently verify key allegations and look for solid evidence. When a short-seller’s report causes a stock to plummet, it might be an opportunity to buy if the allegations are false, or a warning to sell if they are true—requiring careful judgment.