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Etsy (NASDAQ:ETSY) shares are down over 6% Thursday after Citron Research released a short report on the stock alleging it is “one of the largest counterfeiting platforms in the world.”
Citron starts the report by stating Etsy has “hit a new low” as a public company and that its management has “knowingly or, at the very least, negligently, turned this company into the largest organized clearing house for counterfeit goods in the world.”
They argue that Etsy doesn’t just allow the behavior but encourages it and promotes it by selling placement and status to the millions of sites that regularly violate copyright laws.
“Citron believes Etsy is walking on eggshells with the FTC, DOJ, SEC, Customs and Border Protection, and the multitude of brands whose trademarks are being stolen and exploited daily,” the investment research firm said.
Citron Research, run by Andrew Left, noted that the e-commerce firm has brought in high-powered former DOJ and Meta attorneys to “clean things up” but believes it won’t be enough.
“Etsy behavior is bordering on criminal as it knowingly or negligently sells trademarked keywords to counterfeiters,” alleges Citron. “Important to note that while there are some slips in the cracks in other merchant sites like Ebay (NASDAQ:EBAY) or Amazon (NASDAQ:AMZN), the scale and flagracy of the problem is de minimis compared to what is on display by Etsy.”
