Federal Authorities Investigate Block, Jack Dorsey's Company, for Non-Compliant Crypto Services: NBC News
Federal prosecutors in the Southern District of New York are scrutinizing potential compliance failures at Block, the financial technology firm co-founded by Jack Dorsey.
Because Bitcoin
May 1, 2024
NBC News reported that federal prosecutors in the Southern District of New York are scrutinizing potential compliance failures at Block, the financial technology firm co-founded by Jack Dorsey. This investigation stems from information provided by a former employee who raised concerns about widespread and longstanding issues at Block's two main units: Square, a financial services platform for businesses, and Cash App, a popular mobile payment app.
The whistleblower alleges serious deficiencies in Block's compliance practices. These include:
- Insufficient Customer Due Diligence: The company allegedly fails to collect enough information from customers, making it difficult to assess their financial risks and potential involvement in illegal activities.
- Processing Transactions for Sanctioned Countries and Terrorist Groups: Block is accused of processing transactions involving countries subject to US economic sanctions, as well as transactions potentially benefiting terrorist organizations.
- Failure to Report Suspicious Activity: The whistleblower claims Block hasn't been reporting suspicious transactions to the government as required by law. These transactions reportedly involve credit card payments, dollar transfers, and even Bitcoin.
According to the whistleblower, these issues have been known to Block's leadership and board of directors for several years, yet the company allegedly failed to take corrective action. Block, however, maintains they have a robust compliance program and denies any wrongdoing.
The potential consequences for Block are significant. If found to have violated financial regulations, the company could face hefty fines, restrictions on its operations, and reputational damage. This investigation also raises concerns about the potential misuse of mobile payment platforms like Cash App for money laundering and other illegal activities. Regulators are likely to take a closer look at these platforms and the companies behind them to ensure they have adequate safeguards in place.
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