Jack Dorsey’s Block Under Investigation by U.S. Federal Prosecutors
Jack Dorsey’s fintech company, Block, is currently facing scrutiny from U.S. federal prosecutors due to alleged compliance lapses in its cryptocurrency business. Prosecutors from the Southern District of New York are investigating Block’s payment arms, Square and Cash App, based on information provided by a former employee turned whistleblower.
TLDR
- Federal prosecutors are investigating Block over alleged compliance lapses in its crypto business.
- A whistleblower provided documents claiming that Block’s Square and Cash App processed transactions for users from sanctioned countries and terrorist groups.
- The transactions, including Bitcoin transactions, were allegedly not reported to the government.
- Block did not address the compliance issues when alerted, according to the whistleblower.
- The investigation comes amid a broader crackdown on the crypto industry by U.S. regulators.
The whistleblower has submitted roughly 100 pages of documents to prosecutors, showing that Block processed transactions for users in countries subject to U.S. economic sanctions like Iran, Russia, Cuba, and Venezuela. The documents also allege that Block facilitated crypto transactions for terrorist groups.
The transactions in question, which involved credit card, fiat, and Bitcoin transactions, were mainly small dollar amounts. However, the whistleblower claims that the majority of these transactions were not reported to the government, as mandated by law.
The former employee asserts that Block did not rectify its processes when notified of the compliance breaches. They stated that the compliance section was flawed from the beginning and led by individuals unsuitable for a regulated compliance program.
A second anonymous source familiar with Block’s internal systems supported the claims made by the whistleblower.
Edward Siedle, a former Securities and Exchange Commission lawyer representing the whistleblower, mentioned that the documents indicate the compliance breaches were known to Block leadership and the board in recent years.
In response to the allegations, a Block spokesperson emphasized that the company maintains a responsible and comprehensive compliance program that is regularly adjusted to address emerging threats and changing sanctions regulations.
This reported investigation into Block occurs amidst a broader crackdown on the cryptocurrency industry by U.S. regulators, including recent legal actions against prominent figures and companies.
As the investigation into Block’s compliance practices progresses, it remains to be seen how the company will address the allegations and whether this probe will result in further regulatory actions in the cryptocurrency space.
Hot Take: Stay Informed and Vigilant in the Crypto Industry
It is essential for individuals and businesses operating in the cryptocurrency industry to stay informed about compliance requirements and regulations. Failing to comply with these standards can lead to legal consequences and tarnish the reputation of companies involved in crypto transactions.
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