- Documents suggest failure to report transactions, including those from countries under U.S. sanctions, to the government.
- Block’s compliance program is under scrutiny, with claims of systemic flaws and awareness by leadership and the board.
Federal prosecutors in the United States are currently delving into financial transactions at Block, a cryptocurrency company co-founded by Twitter’s Jack Dorsey. This investigation zeroes in on alleged compliance deficiencies within Block’s key units, Square and Cash App.
❖ JACK DORSEY'S BLOCK FACES SCRUTINY FROM FEDERAL AUTHORITIES OVER NON-COMPLIANT CRYPTO SERVICES
Federal prosecutors are scrutinizing Block’s crypto unit, working with whistleblowers to investigate the company's compliance practices, two sources familiar with the matter told…
— *Walter Bloomberg (@DeItaone) May 1, 2024
Documents provided by a former employee to prosecutors in the Southern District of New York purportedly reveal inadequacies in collecting customer information to assess risk. Allegations include processing thousands of transactions involving countries under economic sanctions and facilitating cryptocurrency transactions for terrorist groups.
“Block has a responsible and extensive compliance program and we regularly adapt our practices to meet emerging threats and an evolving sanctions regulatory environment.
Our compliance program includes systems, tools, and processes for sanctions screening, as well as investigating and reporting on sanctions issues in accordance with our regulatory obligations.
Continually improving the safety and security of our ecosystem is a top priority for Block. We have been and remain committed to building upon this work, as well as continuing to invest significantly in our compliance program.”
Numerous transactions, spanning credit card transactions, dollar transfers, and Bitcoin dealings, reportedly went unreported to the government. Despite alerts about these violations, the former employee claims that Block failed to rectify company processes.
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The document, spanning almost 100 pages, highlights transactions, primarily of low-value, involving entities in countries subject to U.S. sanctions, including Cuba, Iran, Russia, and Venezuela, up until last year.
According to the former employee, the compliance department at Block exhibited systemic flaws, raising concerns about its leadership and regulatory adherence. This sentiment was echoed by a second individual with direct insight into Block’s monitoring programs.
Edward Siedle, former attorney representing the former employee, suggests that Block’s leadership and board were aware of compliance deficiencies in recent years.
In response to inquiries, a spokesperson for Block emphasized the company’s commitment to a robust compliance program. They stated that Block continuously updates its practices to address threats and evolving regulatory frameworks. Additionally, they asserted Block’s adherence to legal obligations regarding sanctions screening and reporting.
The spokesperson reiterated Block’s dedication to enhancing safety and security within its ecosystem, highlighting ongoing investments in compliance efforts. They underscored the company’s top priority of safeguarding its operations while adapting to regulatory changes and emerging challenges.
