Investigation Underway: Block, Co-founded by Jack Dorsey, Faces Compliance Allegations
Recent reports suggest that U.S. prosecutors are currently investigating Block, a company known for its cryptocurrency services and co-founded by Jack Dorsey, the co-founder of Twitter. The investigation revolves around allegations of the company’s involvement in processing transactions connected to sanctioned countries and potentially individuals with ties to terrorist activities.
Former Employee Speaks Out About Compliance Issues at Block
According to discussions with prosecutors from the Southern District of New York, a former employee of Block has provided documents that reportedly showcase insufficient information collection from Square and Cash App customers to assess risks accurately.
- The former employee highlighted that many transactions, including credit card transactions, dollar transfers, and Bitcoin transactions, were not reported to the government as required.
- Block allegedly neglected to address these compliance issues even after being alerted to the breaches.
- Documents provided by the individual identified various transactions with entities in sanctioned countries like Cuba, Iran, Russia, and Venezuela, as well as cryptocurrency transactions linked to terrorist groups.
Concerns Raised About Block’s Compliance Department
The former employee expressed concerns about the overall compliance department at Block, stating that the individuals leading the program were not suitable for their roles. Another source with direct knowledge of Block’s monitoring programs echoed these sentiments, both requesting anonymity to avoid potential repercussions.
Block’s Response to Compliance Issues
While Block declined to comment directly on the compliance failures mentioned in the report, the company released a statement acknowledging the situation. Block mentioned that its legal team, along with external counsel and consultants, are working on addressing the compliance issues and implementing necessary remediation steps. The company highlighted that regular sanctions screenings are already conducted on all merchants associated with Block.
Financial Performance and Beliefs of Jack Dorsey
By the end of February, Block, previously known as Square, reported $1.92 billion in Bitcoin sales for the fourth quarter of 2021. While this represented an increase from the third quarter, sales fell short compared to the results seen in the second quarter of the same year.
- The fourth quarter of 2021 saw BTC sales worth $1.92 billion through the Block Cash App, resulting in profits of $46 million.
- Jack Dorsey, a known supporter of Bitcoin, believes in the potential of the cryptocurrency to revolutionize energy usage worldwide.
Hot Take: Taking Compliance Seriously in the Crypto Industry
As a reader interested in the crypto industry, it is crucial to recognize the significance of compliance and regulatory adherence within cryptocurrency companies. The ongoing investigation involving Block and the allegations of processing transactions linked to sanctioned countries and terrorist groups serve as a reminder of the importance of robust compliance frameworks in the digital asset space. Stay vigilant and informed about compliance practices in the crypto sector to ensure a secure and sustainable environment for all stakeholders.
Sources:
– NBC News
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