Chinese news aggregator Qutoutiao lashed out at what it called a "groundless" report by U.S. investigating and due-diligence firm Wolfpack Research that labeled Qutuotiao "malware" and alleged the company had falsified the vast majority of its 2018 revenues.

On Tuesday, U.S.-based Wolfpack Research, which was launched earlier this year by activist short-seller Dan David, issued a report claiming that 74% of Qutoutiao’s 2018 revenues were fake and 78% of its current cash balance is nonexistent. The report also likened the news app to spyware with “an absurd amount of access to and control over its users’ private data.”

The report also alleged that Qutoutiao, which is backed by Tencent, had misled its shareholders by removing independent third-party oversight of its advertising traffic and replacing it with its own in-house “advertising agent” enabling “systematic advertising fraud.”

Nasdaq-listed Qutoutiao responded Wednesday with a statement published on its Weibo microblog refuting all of Wolfpack’s allegations. “The report contains serious mistakes and completely contradicts the basic facts,” the statement said. “The company firmly denies these groundless accusations of data fraud.”

Qutoutiao also defended its efforts in protecting user information, saying it strictly complies with China’s laws and regulations on data privacy.

In August, Shanghai Jifen Culture Communications, one of Qutoutiao’s consolidated entities, was granted an internet news license by the Cyberspace Administration of China, making it the first non-state-owned content aggregation platform in Shanghai to secure such a license.

Qutoutiao said in an earnings report that its net revenue grew 484.5% year-on-year to 3 billion yuan ($426.7 million) in the 2018 fiscal year.

The company’s U.S.-listed shares closed down 4.03% at $2.86 yesterday.

Contact reporter Ding Yi (yiding@caixin.com)

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