Backblaze responds to claims of “sham accounting,” customer backups at risk
1 min read
Summary
Backblaze, a US cloud backup company, is facing accusations of ‘sham accounting’ from short seller Morpheus Research.
The allegations arise from lawsuits filed by two former Backblaze employees and centre on the company’s founders trading shares in the company from April 2022, when the IPO lockup period expired.
According to the lawsuits, the trading plan drew warnings that it breached fiduciary duties, but the sales continued, pushing the stock price down to $3.82 at the end of November 2022, 76% lower than its IPO price.
The former employees also accused the company of pressurising staff to sign off on inaccurate financial statements, and of sending “highly inflated cash flow forecasts” to auditors.
Following the accusations, Backblaze issued a statement describing the allegations as “without merit”.
