Mobile security company NQ Mobile has been called “a massive fraud” by investment research business Muddy Waters.
Not only does Muddy Waters claim that “at least 72% of NQ’s purported 2012 China security revenue is fictitious”, it also describes the NQ Antivirus 7.0 product as “unsafe for sale to consumers” and “spyware”.
In addition, Muddy Waters says “NQ’s acquisitions are highly likely to be corrupt” and “NQ’s cash balances are highly likely to not be real”.
NQ Mobile has issued a statement saying “the allegations and accusations set forth in the Muddy Waters report are false and inaccurate and contain numerous errors of facts, misleading speculations and malicious interpretations of events”. It’s also hosted a conference call to respond to specific points of the Muddy Waters report and has published details of its bank accounts, showing over $166 million and over ¥750 million in deposit accounts.
Legal action “to defend itself against these charges and to protect the interest of shareholders” is now being planned by NQ Mobile.