Muddy Waters Says SoFi Booked a $312M JPMorgan Loan as a Sale — and a ~$1B EBITDA Restatement May Follow

The disputed transaction closed September 30, 2024 — the final day of Q3, eleven days after an SEC comment letter threatened to expose SoFi's loan financing program as a subsidy scheme, and twelve days after the Fed's 50-basis-point rate cut. Muddy Waters alleges the deal was not a true sale under ASC 860 because the buyer, SoFi Funding PL VI LLC, is a consolidated SoFi subsidiary operating from the same address as SoFi Bank — meaning SoFi effectively sold the loan to itself. The firm further alleges this transaction was the keystone supporting $700 million in fair value gains and $250 million in gains on sale, and that a restatement would extend to roughly $1 billion in previously reported EBITDA and materially lower capital ratios. SoFi's CFO has publicly described the deal as a sale; an anonymous source close to the company called Muddy Waters' conclusion "simply wrong" but offered no detailed rebuttal addressing the UCC filing language.

Ticker: SOFI (SoFi Technologies, Inc.)
Research Firm: Muddy Waters Research
Report URL: https://muddywatersresearch.com/research/2026/mw-sofi-borrowingsales-0330/
Position Disclosure: Muddy Waters discloses that it is short SoFi Technologies, Inc. and stands to profit if the share price declines.

Thesis

Muddy Waters Research alleges SoFi Technologies booked a $312 million JPMorgan financing as a loan sale in Q3 2024, and that this transaction was the linchpin of a broader scheme in which SoFi financed the buyers of its own personal loans to support aggressive fair value marks and gain-on-sale accounting.

• Loan Disguised as Sale: SoFi allegedly booked a $312 million JPMorgan facility as a loan sale in Q3 2024, keeping the liability off its balance sheet. CFO Chris Lapointe stated six weeks after the transaction: "Finally, we sold $312 million of senior secured loans at a par execution."
• UCC Filing Contradicts That: A Utah UCC Financing Statement (No. 2410031091442-5), filed October 1, 2024, names SoFi Bank as debtor and JPMorgan Chase Bank as secured party under a Credit Agreement dated September 30, 2024 — the roles of a borrower and lender, not a seller and buyer.
• SoFi Sold to Itself: The alleged "sale" was made to SoFi Funding PL VI LLC, a consolidated SoFi subsidiary operating from the same address as SoFi Bank. The report alleges the transfer was not a true sale under ASC 860, because SoFi effectively sold the loan to itself.
• Vendor Financing Pattern (Alleged): Beginning in Q4 2023, SoFi allegedly launched a "Secured Loan" program, lending approximately 90% of unpaid principal balance to a Carlyle trust, CSS PL 2023-1, at roughly 5%, enabling counterparties to buy SoFi personal loans at prices that supported SoFi's escalating fair value marks. Two more counterparties were added over the following three quarters.
• SEC Pressure as Trigger (Circumstantial): An SEC comment letter dated September 19, 2024 — eleven days before the disputed transaction — allegedly threatened to expose SoFi's secured loans as subsidies rather than market financing, which Muddy Waters argues prompted SoFi to seek a transaction that would validate the financing terms and qualify for sale accounting under ASC 860.
• Suspicious Pricing (Circumstantial): The transaction closed twelve days after the Federal Reserve cut rates by 50 basis points, meaning the asset should have sold above par. The report argues the par execution itself is evidence this was a loan advance rather than a negotiated market sale.
• Restatement Scope (Alleged): Muddy Waters alleges that when SoFi restates the $312 million borrowing, it will also restate approximately $1 billion of previously reported EBITDA, and that capital ratios will be restated materially lower. The report frames the $312 million transaction as the keystone supporting $700 million in fair value gains and roughly $250 million in gains on sale.
• Management Incentive (Alleged): The accounting treatment allegedly inflated reported profits and management bonuses while shareholders bear approximately 15% annual dilution.

Notable Details

• The disputed transaction closed on September 30, 2024 — the final day of Q3, eleven days after the SEC comment letter and twelve days after the Fed's 50-basis-point rate cut. The timing positions the deal as a quarter-end accounting fix executed under simultaneous regulatory and market pressure.
• The UCC filing's Exhibit A describes SoFi Funding PL VI LLC simultaneously as "Purchaser," "borrower," and "Assignor Secured Party" — and JPMorgan simultaneously as "senior lender" and "Assignee Secured Party." Those layered roles describe a financing structure, not a clean asset sale.
• The filing includes a direct warning: "A purchase of or security Interest in any collateral (including instruments) described in this financing statement would violate the rights of the Secured Party." That language confirms JPMorgan held a secured claim on the collateral underlying the transaction.
• SoFi's 2023 10-K listed 25 subsidiaries in Exhibit 21; its 2025 10-K listed 16. Its 2024 10-K listed two — and SoFi Funding PL VI LLC was not among them, despite being central to the disputed transaction.
• The underwriter analyst Muddy Waters identifies as defending SoFi carried the highest Bloomberg price target on the stock at $38 — 1.69 standard deviations above the mean target price of $25.45 across 21 Bloomberg estimates — and, per Muddy Waters, offered no evidence to counter the UCC filing analysis.

"The transfer of the CSS receivable to SoFi Funding should not be a 'true sale.' SOFI 'sold' the loan to itself."

— Muddy Waters Research, summarizing its core allegation that the transaction's buyer was a consolidated SoFi subsidiary, making the "sale" intra-company rather than arm's-length.

FAQs

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