Grizzly Research short XP Inc., says ‘running a massive Ponzi scheme’

Grizzly Research is short XP Inc. (XP), saying its “research uncovers that the company is running a massive Ponzi scheme facilitated through certain derivatives sales to retail clients, which are funneled through special funds and misrepresented as proprietary trading profits.” In a recently published report, Grizzly adds that, “At the center of the scheme is a XP fund called GLADIUS FIM CP IE that returned over 2,419% over the last five years with unbelievably low volatility. The returns from Gladius and its affiliated fund COLISEU FIM CP IE are higher than XP’s earnings. Without Gladius and Coliseu, XP would be unprofitable… According to XP’s former employees, the scheme only continues to work as long as XP is able to sell more COEs. As soon as the inflows stop growing the system falls apart and XP could be liable for enormous obligations it cannot meet. Insiders outright called Gladius a ‘Madoff-like Ponzi scheme.’ Given Gladius’ incredible returns that nobody else seems able to replicate, the insider allegations, and XP’s reliance on these returns, we believe investors and regulators should be concerned and demand answers.”