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Muddy Waters doubles down on allegations of dLocal balance sheet discrepancies

(Updates with share price drop, clarifies allegations) Dec 1 (Reuters) - Hedge fund Muddy Waters repeated itsstance that Uruguayan payments firm dLocal's <DLO.O> booksshowed numerous discrepancies, adding in a note Thursday it was"more convinced than before" that dLocal had used client fundsto pay a special dividend to its shareholders from before itsinitial public offering (IPO). Since the allegations from Muddy Waters last month, dLocalhas held calls with clients from several banks, Muddy Waterssaid. JP Morgan said in a note following its call that dLocalstressed it had separated client funds from its own. Muddy Waters said dLocal's calls with clients were"non-specific" and "sweet-talking," and that "all (dLocal)needed to do to address this issue was provide an explanation asto how the cash flows reconcile." Dlocal did not immediately respond to a request for comment,but has previously denied the Muddy Waters report. It said lastmonth it would "rebut the allegations in the appropriate forumin due course." Shares in dLocal on the Nasdaq were down 15% Thursdayafternoon, having dropped nearly 50% since Muddy Waters firstreleased its report in mid-November. Muddy Waters shorted the payments firm last month,alleging "concerns about the control of client funds" and notinga multi-million deficit in the company's 2020 cash flows andmerchant funds-related accounts. Muddy Waters also repeated that dLocal's books showed anumber of other discrepancies, which dLocal "shouldsubstantively address in writing." The allegations from the hedge fund come as its founder,Carson Block, is facing a Justice Department probe as part of aninvestigation into short-sellers and hedge funds on suspectedcoordinated manipulative trading. (Reporting by Kylie Madry in Mexico City; Additional reportingby Niket Nishant in Bengaluru and Isabel Woodford in MexicoCity) ((Kylie.Madry@thomsonreuters.com;))

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