The Jack Dorsey-run company’s errors are reportedly being looked into by federal prosecutors.
There is a clear indication that the government is intent on acquiring Block. According to reports, prosecutors from the Southern District of New York are conducting an investigation into the parent firm of Square and Cash App, which is dealing with major compliance violations. A former employee of Block has reportedly handed over documents to federal investigators, which paint a picture of how the company failed to acquire required risk-assessment information from consumers and then executed illicit transactions. This information was provided by NBC News.
According to the documents, Block allegedly gave his approval to a number of cryptocurrency transactions that included well-known foreign terrorist organizations. Additionally, it has been alleged that Square processed thousands of transfers involving countries that are subject to economic penalties. The individual who allegedly disclosed the information to NBC News stated, “From the very beginning, everything in the compliance section was flawed.” It is being directed by individuals who have no business being in charge of a compliance program that is regulated.
According to the allegations, the majority of transactions included credit cards, dollar transfers, or Bitcoin, but that they were not disclosed to the government as required by law. Furthermore, it has been stated that Block did not “correct company processes” after he was informed of the breaches.
Following the publication of a separate article by NBC News in February, which highlighted two distinct whistleblowers who brought to light the same problems at Block, the investigation has been launched. They listed “questionable Cash App transactions with entities under sanction by the Treasury Department’s Office of Foreign Assets Control, operations known to sell personal information and credit card data for illegal purposes, and offshore gambling sites that are prohibited to citizens of the United States.”
There is evidence that the practice lasted for a few of years. According to NBC News, some one hundred pages of documents were reviewed by the whistleblower. These records involved individuals or organizations from countries that are subject to sanctions imposed by the United States, such as Russia, Iran, Venezuela, and Cuba. According to reports, some of them were from as recently as the year 2023.
The individual who blew the whistle asserts that Block’s management was aware of the suspected improper conduct. According to Edward Siedle, a former attorney for the Securities and Exchange Commission who is representing the whistleblower, “It is my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years.” the statement was made to NBC News.
According to the whistleblower, Block’s board of directors was given information regarding the compliance difficulties in addition to senior management. A number of board members have lately quit unexpectedly, including former United States Treasury Secretary Lawrence Summers, who resigned in February, and Sharon Rothstein, who had been on the board since 2022. It is possible that these departures are more of a coincidence than anything more. Block stated to NBC News that they were leaving in order to devote more time to other activities and that their departures were not “a result of any disagreements with the company on any matter relating to the company’s operations, policies, or practices.” Block’s departures were made in order to spend more time to other activities.
As a result of the fact that at least some of the modern financial platforms had become something of a Wild West, the federal authorities have taken a greater interest in these platforms in recent years. The cryptocurrency business experienced a precipitous decrease as a direct result of the fraudulent activities of FTX and the eventual bankruptcy of the exchange. Elon Musk’s X, which is the husk of what was once Dorsey’s Twitter, is said to have violated US sanctions by taking blue-check subscription payments from terrorist organizations. It is unclear whether the federal government has become involved in this matter.