Former Afterpay shareholders have brought a class action against Jack Dorsey’s Block, claiming it failed to disclose a cyber breach mere weeks before buying the Australian buy now pay later company.

Data from 8.2 million customers was stolen weeks before Block acquired Afterpay for $39 billion.

Although the deal was struck in August 2021, it wasn’t finalised until January, 2022. The data breach, which occurred on December 10, 2021, wasn’t revealed until April 4, after which share prices tumbled 15 per cent overnight.

The lawsuit, brought against Block and its co-founders, Jack Dorsey and Jim McKelvey, claims the company failed to “adequately maintain an internal control system” which led to the hack, and subsequent crash in the price of Block’s shares.

The class action alleges the data breach was known to company insiders at the time of sale, and wasn’t disclosed.

In addition, the shareholders claim a short-seller report published by Hindenburg Research prompted further falls in the share price, and was based on illegal activities known to the company..

The blistering report alleged that Block’s Cash App was used to move illegal money, and facilitate payments for crime, such as sex trafficking, and drug dealing.

The lawsuit seeks damages in an amount to be proven at trial.