XP Inc. shares are declining due to allegations of a Ponzi scheme.

XP Inc. (NASDAQ: XP) shares fell by 4% following allegations from short seller Grizzly Research, which accused the Brazilian fintech company of operating a "Madoff-like Ponzi scheme." The report targets the company’s financial practices, particularly the operations of the fund GLADIUS FIM CP IE, suggesting that XP Inc.'s profits are largely based on misleading financial products sold to retail customers.

Grizzly Research claims that XP Inc. has been running a Ponzi scheme through the sale of Certificados de Operações Estruturadas (COE), which are marketed as private trading profits but are actually reliant on funds from new premiums. The report highlights that without the profits from GLADIUS and its associated fund, COLISEU FIM CP IE, XP would be unprofitable. The findings have raised significant concerns among investors, reflected in the company's declining stock price during trading sessions.