Counterfeit goods have long caused problems for China’s ecommerce goliaths. Now fake users may be the issue for a local video streaming company, YY Live, according to allegations by short seller Muddy Waters. YY Live is controlled by Nasdaq-listed Joyy. These charges have wider implications.

Questions about tech companies and fake accounts are not exclusive to China. In the US, Facebook’s own estimates suggest duplicate accounts represent about 11 per cent of its monthly active users and fake versions another 5 per cent. When adjusted for those, user number growth is much lower.

Chinese social media company Joyy has become the latest target of criticism due to YY. The US short seller run by Carson Block has called it a fraud, claiming the service has fake transactions and fake users, and uses bots (which act like human users). Joyy denied the report, which it says demonstrates a lack of understanding of the industry. Joyy’s shares still fell 26 per cent.