6 years ago, the hard-earned money of 220,000 people in Dongguan flowed into a US stock that surged 38 times

Original Author: Lin Wanwan, Dongcha Beating

January 19, 2026, Martin Luther King Jr. Day, U.S. stock markets were closed.

A 35-page short report quietly went online. The title was sufficiently shocking: "The Southeast Asian Money Laundering Syndicate's Nasdaq 'Laundromat'".

The report's core conclusion was just one sentence: "AppLovin is the ultimate milestone of 21st-century transnational financial crime."

The publisher, Capitalwatch, is an investigative firm specializing in U.S.-listed Chinese stocks. Considering their previous allegations of financial fraud against Nuohuo Health ultimately led to its delisting in 2025, investors have reason to take this report seriously.

The next day at market open, AppLovin's stock fell 4.8% in pre-market trading. In the three preceding trading days, the stock had already dropped a cumulative 15%.

Interestingly, however, three days later, buying volume for AppLovin continued to increase, and bullish sentiment remained high.

This created a classic Rashomon effect: short sellers called it a "false empire," while retail investors called it "another hit job."

Who is telling the truth?

1. The Allegation: Advertising as Money Laundering

The Capitalwatch report focused on three key individuals.

The first is Hao Tang, one of AppLovin's major shareholders.

The report alleges his wealth includes approximately $957 million in illegal proceeds related to the collapse of the Chinese P2P platform Tuandai Wang, and about $2.15 billion in gambling-related funds. Capitalwatch describes him as a "fugitive from justice" and claims "every dollar of his equity is soaked in the blood and tears of victims of illegal fundraising."

The second is Ling Tang, who holds approximately 20.49 million AppLovin shares through Angel Pride Holdings, representing about 7.7% of the company, making her one of the largest individual shareholders. The report claims she is Hao Tang's sister and that her holdings are a "key component of the Tang family money laundering network."

The third figure is the most critical: Chen Zhi, founder of Cambodia's Prince Group. In October 2025, the U.S. Department of Justice indicted him for operating forced labor scam compounds engaged in "pig butchering" cryptocurrency fraud. The same day, the DOJ announced the seizure of approximately $15 billion in Bitcoin, the largest asset forfeiture action in U.S. history. On January 7, 2026, just 12 days before the report's release, Chen Zhi was arrested in Cambodia and repatriated.

The report attempts to prove that these three individuals constitute a money laundering network spanning China, Cambodia, and the United States. And AppLovin is the final "exit" where the dirty money is ultimately "cleaned."

The core allegation is a system dubbed the "Mobius Strip": criminal syndicates pay advertising fees to AppLovin through intermediaries, converting illicit funds into legitimate revenue.

The specific operation is described as follows: The scale of advertising spending by the Cambodian super-app WOWNOW on AppLovin is severely disproportionate to its market size. These excessive ad expenditures are essentially "fees" for money laundering.

Prince Group uses shell companies to open advertiser accounts, paying hundreds of millions of dollars to purchase traffic. AppLovin recognizes this as legitimate revenue in its financial reports, then settles it as "developer revenue share" to overseas accounts controlled by Prince Group. At this point, the fraud proceeds have been transformed into legitimate remittances from a Nasdaq-listed company.

The report also alleges AppLovin's technology serves as a criminal tool. The "silent install" mechanism allegedly allows apps to be installed on devices without user consent. The AXON algorithm is accused of helping distribute gambling and scam apps, precisely targeting vulnerable users.

If these allegations are true, it means a significant portion of AppLovin's astonishing performance growth in recent years came from "unsustainable criminal syndicate money laundering budgets."

But the question is: just how astonishing has this company's performance been?

2. The Myth: The AI Darling That Rose 700% in a Year

To understand the destructive potential of this short report, one must first understand the capital market myth AppLovin created over the past three years.

In 2025, AppLovin's stock price rose 108% for the full year. In 2024, that number was even more staggering, exceeding 700%, with its market cap once surpassing $140 billion.

From its 2022 low point, AppLovin surged 38-fold. Over the same period, Nvidia rose 10-fold, Bitcoin 6-fold, and gold less than 1-fold.

The company was founded in Silicon Valley in 2011, initially as a platform to help mobile developers acquire users and monetize. It acquired the ad mediation platform MAX in 2018 and launched the AI-driven ad optimization engine AXON in 2020. It went public on Nasdaq in 2021 but performed modestly in its first two years.

The turning point came in 2023. After AXON was upgraded to version 2.0, its effectiveness leaped. Coinciding with Apple's iOS 14 privacy policy changes that devastated the entire mobile advertising industry—Meta lost hundreds of billions in market value—AppLovin rose against the trend. Wall Street began rediscovering the company, labeling it an "AI beneficiary."

By Q3 2025, the company's revenue grew 68% year-over-year to $1.4 billion, the second-highest quarterly growth rate in the past four years; net profit grew 92% to $836 million.

In July 2024, the company sold its game studio Tripledot Studios for $800 million, completing its transformation into a pure-play advertising technology company. A month later, it increased its stock buyback program by $3.2 billion and joined the S&P 500 index.

From an obscure mobile ad company to an S&P 500 component and AI darling, AppLovin took less than two years.

But doubts never ceased. In February 2025, Fuzzy Panda and Culper Research simultaneously announced short positions, accusing AppLovin of "systematic abuse of app permissions." In March 2025, Muddy Waters joined the fray, claiming 52% of e-commerce conversions came from retargeted users, with incremental value of only 25%-35%.

Each time, the stock price dipped briefly, then continued climbing.

Until Capitalwatch's report. It no longer nitpicks technical details or financial metrics but directly points to a more fatal question: Where does this company's money come from?

To answer that, we need to rewind seven years, back to Dongguan, China.

3. The Source: The Collapse of Tuandai Wang and the "Sister's" 5.3 Million

March 27, 2019, Dongguan, China.

Tuandai Wang founder Tang Jun and co-founder Zhang Lin surrendered to the police. This once top-tier Chinese P2P platform collapsed overnight.

Founded in 2012, Tuandai Wang had facilitated over 130.7 billion RMB in online lending at its peak. Tang Jun himself was a star entrepreneur, serving as a mentor at a Dongguan startup incubator, often lecturing young people on how to start and fund a company. Paison Tech, which he controlled, was listed on the Shenzhen Stock Exchange, with a market cap once exceeding 20 billion RMB.

Then, in the summer of 2018, China's P2P industry experienced a "thunderstorm wave." Tighter regulation, liquidity drying up, and spreading bank runs saw hundreds of platforms collapse within months.

Police acted swiftly, arresting 41 individuals involved, freezing 3.1 billion RMB in bank accounts, 35 properties, an airplane, and 40 cars. The investigation found that Tang Jun and Zhang Lin attempted to transfer and hide assets before the case broke; subsequently, over 880 million RMB in hidden funds were recovered.

At the time of collapse, Tuandai Wang had about 220,000 active lenders involved in a total loan amount of 14.5 billion RMB. Most were ordinary families lured by high interest rates, their savings wiped out overnight.

In 2022, the court issued its verdict: Tang Jun was sentenced to 20 years in prison and fined 51.5 million RMB.

The case was closed, but where did the money go? A huge gap existed between recovered assets and investor losses.

The Capitalwatch report claims part of the answer lies in an extradition hearing in Bordeaux, France, in 2021.

That year, a man named Hao Tang flew on a private jet from Iceland to France and was arrested at the airport. An extradition request followed. But the Bordeaux Court of Appeal ultimately refused extradition based on the "political exception" clause, ruling that while the request was ostensibly based on money laundering charges, it had political motives. Hao Tang's defense team argued he was entangled in a high-level political case.

Hao Tang regained his freedom. But the court judgment inadvertently disclosed the money laundering evidence chain.

The judgment showed that during the critical window before Tuandai Wang's collapse, from February 2018 to March 2019, Hao Tang used a network of shell companies to help Tang Jun transfer 632.89 million RMB in illicit funds. Money laundering methods included funds disguised as "aircraft management fees," 27 labyrinthine cross-border transfers, and using underground banks for "matched transactions" to evade foreign exchange controls.

The court did not deny the fact of these fund transfers.

The judgment also revealed a key detail: forensic audits found approximately 5.3 million RMB was transferred to a company account controlled by Hao Tang's "sister."

This clue later led Capitalwatch to AppLovin's shareholder list.

Cross-referencing SEC filings, the report found Ling Tang holds a 7.7% stake in AppLovin through Angel Pride Holdings. SEC filings show her contact address is on Wing Hong Street, Cheung Sha Wan, Kowloon, Hong Kong, in the same district as Hao Tang's declared address. Early business registrations show physical overlap in their office addresses.

The report's conclusion: "There is ample reason to conclude Ling Tang is Hao Tang's sister, and the billions of dollars in shares held by Angel Pride Holdings are a key component of the Tang family money laundering network."

But Tuandai Wang was only the "primitive accumulation" of funds. To complete the money laundering cycle, another key node was needed.

That node was in Phnom Penh, Cambodia.

4. The Undercurrent: The Industrialization of Pig Butchering and the $15 Billion Seizure Case

Chen Zhi, a mysterious tycoon born in Fujian who later became a Cambodian citizen. Over the past decade, he built Prince Group into Cambodia's largest business empire, spanning banking, aviation, and real estate.

But according to U.S. Department of Justice court documents, beneath this glossy business facade lies another world. Since 2015, Chen Zhi and his executive team "secretly developed Prince Group into one of Asia's largest transnational criminal organizations."

The indictment paints a shocking picture: Prince Group operates multiple forced labor scam compounds in Cambodia, "housing large dormitories enclosed by high walls and barbed wire, operating like violent forced labor camps."

Most laborers in the camps are foreigners lured by promises of high-paying jobs. Once inside, their passports are confiscated, and they are forced to work over ten hours a day under armed guard, engaging in "pig butchering" scams. Chen Zhi himself allegedly participated in violence against people in the camps and possessed photos depicting beatings and other forms of torture.

By 2018, Prince Group was allegedly profiting over $30 million per day from such fraudulent activities.

In October 2025, the U.S. DOJ announced the seizure of approximately $15 billion in Bitcoin, the largest asset forfeiture action in U.S. history. The same day, the Treasury Department designated Prince Group as a transnational criminal organization, imposing sanctions on Chen Zhi and over 100 related individuals and entities.

On January 7, 2026, Chen Zhi was arrested in Cambodia and subsequently repatriated for investigation. Cambodia's Ministry of Interior confirmed his Cambodian citizenship had been revoked.

The Capitalwatch report attempts to establish a connection between Hao Tang and Chen Zhi. It notes that in late 2018, on the eve of the Tuandai Wang crisis, control of the Hong Kong-listed company Geotech Holdings changed hands. The sole shareholder of the BVI company that initiated the acquisition was Chen Zhi. The report argues that operational overlaps during this time window prove collaboration between the two within the money laundering network.

The key link connecting both to AppLovin is the Cambodian super-app WOWNOW.

In May 2022, Prince Bank established a payment partnership with WOWNOW, fully integrating underlying payment systems. WOWNOW claims to serve over 800,000 users and integrate with over 13,000 merchants.

But in a country with a population of only 16 million, why would such a local lifestyle app need to invest massive budgets on a U.S. advertising platform?

The report's answer: These advertising expenditures are essentially money laundering channels.

5. Rashomon: Who is Telling the Truth?

The allegations are serious, but AppLovin is not without room for defense.

CEO Adam Foroughi has initiated an independent investigation into the short sellers' activities, insisting the allegations are "false and misleading" and motivated by "personal financial gain from short selling."

There is also another rational perspective: "Anything is possible. But if I were to assume I wanted to launder a large sum of money, I probably wouldn't try to do it through a publicly listed entity registered in the U.S., subject to more regulatory scrutiny than an ordinary global company."

This is a thought-provoking counter-question. A Nasdaq-listed company is subject to SEC oversight, Big Four audits, institutional investor due diligence, and short seller attacks. Conducting large-scale money laundering in such a transparent environment requires not just audacity but an extremely sophisticated system.

There are also different interpretations of the French court's ruling. The court refused extradition for Hao Tang based on the "political exception" clause, not by denying the money laundering facts. Does this prove his innocence, or merely that he successfully exploited a legal loophole?

As of January 21, 2026, several key questions remain unanswered.

What exactly is WOWNOW's advertising spend on AppLovin? This is the core verifiable point of the entire "advertising as money laundering" allegation. The SEC has been investigating AppLovin's data collection practices since October 2025; does this investigation intersect with Capitalwatch's allegations? If, after his repatriation, Chen Zhi discloses financial dealings with Hao Tang, could it trigger further U.S. regulatory scrutiny of AppLovin's shareholder structure?

Currently, AppLovin's short interest is around 5%, indicating investor caution. The company is scheduled to report Q4 earnings in February.

The final conclusion of the Capitalwatch report is that this is an "empire built on quicksand," its foundation "burying the tears of Tuandai Wang victims and the blood and sweat of Southeast Asian compound laborers."

Whether this judgment is correct, time will tell. But the questions the report raises—about shareholder backgrounds, fund sources, and compliance reviews—are indeed worthy of serious consideration by the market and regulators.

Capital markets are never short of myths. Every few years, a company rises at a staggering pace, its stock price soars, its valuation defies imagination, and analysts compete to endorse it with the most lavish praise. In this process, skeptics are often dismissed as outdated "failures to understand the new paradigm," until one day, the tide goes out.

Will AppLovin be the next debunked myth, or another failed short seller attack? No one knows. But one thing is certain: in a market where everyone shouts "AI revolution," there are still those willing to ask, "Where does the money come from?" That in itself is a rare form of clarity.

For every investor, perhaps the most important lesson is not to pick a side, but to learn to remain vigilant amidst the frenzy. When a stock rises 700% in a year, when everyone discusses how advanced its technology is or how magical its algorithms are, perhaps we should also ask a few more fundamental questions: Who are this company's major shareholders? Where did their money come from? Is that money clean?

After all, in the world of capital, the most expensive cost is never missing a ten-bagger, but forgetting in the狂热 that the house always sits on the other side of the table.

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