April 8 (UPI) -- An activist U.S. research firm has accused Chinese streaming platform iQiyi of fraud, saying it artificially inflates user numbers and revenues.
Wolfpack Research made the accusations in a 37-page report it says is based on interviews with more than 1,500 users in China, industry insiders and credit reports.
"We estimate [iQiyi] inflated its 2019 revenue by approximately ... 27-44 percent," the report states. "[iQIYI] does this by overstating its user numbers by 42-60 percent.
"Then, [iQiyi] inflates its expenses, the prices it pays for content, other assets and acquisitions in order to burn off fake cash to hide the fraud from its auditor and investors."
The Chinese platform was founded in 2010 and claims more than 100 million users. It's owned by Baidu, Inc.
Wolfpack is a global financial research and due diligence firm it says is "dedicated to protecting investors by ensuring a balance in the financial ecosystem."
The report said iQiyi, which has been called the "Netflix of China," has in the past inflated advertising revenues to investors by as many as three times. It said bogus figures were also found in the company's content acquisition and production.
The streaming service disputed Wolfpack's report Tuesday, saying it contained "numerous errors, unsubstantiated statements and misleading conclusions."
"[We have] always been and will remain committed to maintaining high standards of corporate governance and internal control, as well as transparent and timely disclosure in compliance with the applicable rules and regulations of the Securities and Exchange Commission and the Nasdaq Global Select Market," iQiyi said in a statement.