(Reuters) -Hedge fund Muddy Waters (NYSE:WAT) repeated its stance that Uruguayan payments firm dLocal's (O:DLO) books showed numerous discrepancies, adding in a note Thursday it was "more convinced than before" that dLocal had used client funds to pay a special dividend to its shareholders from before its initial public offering (IPO).
Since the allegations from Muddy Waters last month, dLocal has held calls with clients from several banks, Muddy Waters said. JP Morgan said in a note following its call that dLocal stressed it had separated client funds from its own.
Muddy Waters said dLocal's calls with clients were "non-specific" and "sweet-talking," and that "all (dLocal) needed to do to address this issue was provide an explanation as to how the cash flows reconcile."
Dlocal did not immediately respond to a request for comment, but has previously denied the Muddy Waters report. It said last month it would "rebut the allegations in the appropriate forum in due course."
Shares in dLocal on the Nasdaq were down 15% Thursday afternoon, having dropped nearly 50% since Muddy Waters first released its report in mid-November.
Muddy Waters shorted the payments firm last month, alleging "concerns about the control of client funds" and noting a multi-million deficit in the company's 2020 cash flows and merchant funds-related accounts.
Muddy Waters also repeated that dLocal's books showed a number of other discrepancies, which dLocal "should substantively address in writing."
The allegations from the hedge fund come as its founder, Carson Block, is facing a Justice Department probe as part of an investigation into short-sellers and hedge funds on suspected coordinated manipulative trading.