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Aphria Inc., one of the biggest Canadian pot companies, fell as much 29 per cent in New York after a short seller said it was a “black hole.”

Gabriel Grego, founder of Quintessential Capital Management, told delegates at a conference in New York Monday that Aphria had diverted funds into inflated investments held by insiders. In a report he ran in conjunction with Hindenburg Research, a forensic analysis firm, Grego said the company, which had a US$2 billion market capitalization last week, is worthless. Both Quintessential and Hindenburg are shorting Aphria.

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“Our target price for Aphria is zero,” Grego told attendees at the conference.

“Allegations that have been made by the short seller Quintessential Capital in the report that they published this morning are false and defamatory,” Tamara Macgregor, Aphria’s vice president of communications, said in an emailed statement. “The company is preparing a comprehensive response to provide shareholders with the facts and is also pursuing all available legal options against Quintessential Capital.”