Global remittance and money-transferring business Remitly saw its stock price fall more than 2% this week after short seller Spruce Point Capital Management published a short report listing a litany of allegations against the $4 billion Nasdaq-listed fintech.

According to Spruce Point’s report, Remitly’s customer testimonials are “dubious” and play a significant role in its thesis questioning the company’s trustworthiness. The hedge fund claims a reverse image search tool revealed reviews that included images of smiling women wearing traditional saris and head coverings were actually just stock photos. Spruce Point also accused Remitly of manipulating the review ratings on its website. Overall, the hedge fund said these points are evidence Remitly isn’t being transparent with customers. It took a short position in the company’s stock and owns derivative securities that will benefit if the share price tumbles.

Remitly did not respond to requests for comment.

Remittance businesses are a crucial financial lifeline for low- and middle-income countries: Emigrants use remittances to send money to their home countries for bills, food, and education costs. The World Bank projects the total amount of money transferred around the globe will swell to $690 billion this year. The top five countries for remittance inflows are India, Mexico, China, and the Philippines, respectively, with the U.S. being the largest source around the world, followed by Saudi Arabia and Switzerland.

Banks are the most expensive way to send remittances, with fees about 12% of the amount, while sending money through the mobile operators costs 4.4%, according to World Bank data.

Remitly describes itself as a trusted provider of digital financial services that transcend borders and has a global footprint across 170 countries. It operates 5,100 remittance corridors around the world and users can send funds to 5 billion bank accounts and mobile wallets. It also has 470,000 cash pick-up options. CEO Matt Oppenheimer told Fortune last year that trust is key to providing services to a broad user base that counts low-income migrants sending savings to families back home. Oppenheimer said he personally handles customer-service calls when he visits Remitly call centers to ensure users are being treated with care.

According to Remitly’s 2025 annual financial report , the company’s revenues grew 34% to $1.26 billion last year and it achieved profitability in the third quarter . Active customers grew 32% year-over-year to 7.8 million, compared to 5.9 million the year before.

Still, the stock price dropped following Spruce Point’s report, and it’s down 11% year-to-date.

“Spruce Point questions both Remitly’s transparency and its authenticity,” the hedge fund wrote in the short report.

Spruce Point also claimed Remitly is susceptible to competition from stablecoins, which are digital currencies backed by a stable asset like the U.S. dollar and can be used in transactions; Wise, a competitor to Remitly, is pulling ahead in this area, the short report claims. On top of competition, Spruce Point said turnover in the company's legal, compliance, and risk functions was “troubling.” Spruce Point claimed eight executives in those functional areas have departed since July 2024.

Last week, Remitly announced Vice Chair Joshua Hug would depart his role in May but would remain on the board as a non-employee director. Hug, 45, co-founded the company in 2011 and has served as its chief operating officer since October 2016. He holds about 2.5% of the company’s stock, per its most recent proxy statement , and Hug’s holdings include 2 million shares he has pledged as collateral to secure a personal line of credit.

Spruce Point also pointed to Hug’s pledged stock as an example of “poor governance with [a] potentially harmful impact to investors.” The hedge fund said companies following best practices adopt policies that prohibit stock pledging.

“By doing so, it mitigates the deleterious impact of forced selling of stock upon margin calls or a sharp decline in the value of the equity,” Spruce Point wrote.

Hug did not immediately respond to a request for comment.