The New York-based investment management firm also issued a "strong sell" rating on Nuvei's stock, saying it faces a 35% to 50% long-term downside risk. Shares in Nuvei are up almost 60% this year.

Nuvei did not immediately respond to a Reuters request for comments.

In January, Nuvei bought Paya Holdings, a payments solutions company, in a $1.3 billion levered deal. Spruce Point alleged in its report that the acquisition "appears troubled," as Paya was losing market share before the takeover.

Spruce Point said Nuvei's 2023 earnings before interest, taxes, depreciation and amortization (EBITDA) is falling roughly 40%, if Paya's acquisition is excluded.

"Nuvei is exposed to slowing inflation and consumer spending. Our analysis also suggests that its underlying economics are deteriorating and that it is heavily reliant on buoying its stock price as a tool to attract, retain and compensate employees," it said.

The report also challenged Paya's number of clients, based on talks with a former Paya executive, saying it never had one million customers as it mentions.

The short seller also said Nuvei may have an equity interest in bankruptcy crypto exchange FTX and failed to disclose its total crypto and digital exposure.

(Reporting by Carolina Mandl, in New York; Editing by Marguerita Choy)