Key Takeaways:
- Federal Investigation: U.S. federal prosecutors are investigating Block, Inc., involving allegations by a whistleblower about compliance failures in processing transactions for sanctioned countries and terrorist groups through its subsidiaries, Square and Cash App.
- Scope of Allegations: The whistleblower claims involved unreported transactions in sanctioned countries such as Iran, Russia, Cuba, and Venezuela, encompassing dealings in credit cards, fiat currencies, and Bitcoin.
- Company Response: Despite the severity of the allegations, Block, Inc. maintains that it has a robust and continually evolving compliance program to address regulatory changes and new threats.
U.S. federal prosecutors are currently investigating the fintech company Block, Inc., led by Jack Dorsey, following claims by a whistleblower who alleged serious compliance issues within the company’s operations.
According to reports, the whistleblower has provided documents to prosecutors from the Southern District of New York showing that the company’s subsidiaries, Square and Cash App, have processed transactions for users in sanctioned countries and for terrorist groups.
Jack Dorsey’s Block is under investigation – Report 🚓💥
— CryptoSavingExpert ® (@CryptoSavingExp) May 2, 2024
Click below to find out why ⬇️⬇️⬇️https://t.co/QGj7r7zM0y pic.twitter.com/EAGusP5cfq
The whistleblower, a former employee of Block, claims that Square and Cash App handled numerous small-dollar transactions for parties located in Iran, Russia, Cuba, and Venezuela—all countries facing U.S. economic sanctions.
Furthermore, these transactions included dealings in credit card payments, fiat currencies, and Bitcoin.
Notably, it is alleged that many of these transactions were not reported to the government as required by law.
Jack Dorsey's Block faces scrutiny from federal authorities over non-compliant crypto services: NBC News https://t.co/kkX6XHjrIl
— The Block (@TheBlock__) May 1, 2024
The documents, which cover about 100 pages, suggest that there has been a long-standing and broad oversight in compliance practices at Block, which were not rectified even after the leadership was made aware of them by the whistleblower.
“From the ground up, everything in the compliance section was flawed,” the whistleblower commented, criticizing the competency of those at the helm of these compliance efforts.
Edward Siedle, a former lawyer at the Securities and Exchange Commission now representing the whistleblower, expressed that the breaches in compliance appear to have been known to the leaders and board members of Block for years.
Federal authorities scrutinize Jack Dorsey's Block over alleged non-compliant crypto services, violation of sanctions, and laxed practices at its Square and Cash App units.⚖️ —NBC News
— Moby Media (@mobymedia) May 1, 2024
In response to these allegations, a spokesperson from Block asserted that the company maintains a “responsible and extensive” compliance program, which is continually updated to tackle new threats and changes in the regulatory landscape regarding sanctions.
This investigation into Block, Inc. is part of a broader series of legal challenges facing cryptocurrency firms in the U.S.
Recently, Changpeng Zhao, the founder of Binance, received a four-month prison sentence after admitting to shortcomings in the exchange’s Anti-Money Laundering procedures.
WATCH: Changpeng Zhao, the ex-CEO of Binance, received a four-month prison term after pleading guilty to violating US laws against money laundering at the world's largest cryptocurrency exchange https://t.co/TjeJSmQ3Kl pic.twitter.com/0Y7dgnQKOG
— Reuters Business (@ReutersBiz) May 1, 2024
Additionally, the co-founders of the crypto mixer and Bitcoin wallet Samourai Wallet were arrested under money laundering charges but later pleaded not guilty.
In a separate incident, Ethereum development firm Consensys has initiated legal action against the SEC, accusing it of trying to dominate the cryptocurrency future through targeted enforcement actions.
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