US Prosecutors examining Financial transactions at Jack Dorsey’s Block
Block, the payments company founded by former Twitter CEO Jack Dorsey, is reportedly the subject of discussions between federal prosecutors and a former employee regarding alleged widespread compliance lapses.
Reports state that Block, the parent company of Square and Cash App, is under investigation for significant compliance violations by prosecutors from the Southern District of New York.
According to an NBC News investigation, federal prosecutors are looking into the Block, the parent company of Square and Cash App for possible sanctions violations and other regulatory non-compliance issues.
NBC News was informed on Wednesday by two individuals who are acquainted with the situation that federal prosecutors are closely examining Block's cryptocurrency unit and collaborating with whistleblowers to look into the company's compliance practices.
Sources told NBC News that Jack Dorsey's Block allegedly processed cryptocurrency transactions linked to terrorist groups and sanctioned countries because there were inadequate checks in place. Yet according to the publication, Block's Square and Cash App units have "widespread and yearslong compliance lapses" that go much deeper than their purportedly lax cryptocurrency policies.
A former employee of Block is cited as telling NBC News that "thousands" of dubious transactions went unreported to the U.S. Office of Foreign Assets Control, or OFAC, which imposes economic sanctions. "From the ground up, everything in the compliance section was flawed," the employee claims.
More than a hundred pages of what the ex-employees claimed to be internal company documents were provided to the publication. These included records of correspondence from as recently as last year between the Block and sanctioned countries like Russia and Iran. The correspondence trail supports allegations that even after Block learned of the sanctioned entities' misappropriation of its services, it continued to facilitate transactions involving them.
NBC was informed by Block that it had not intentionally broken any international sanctions.
"It's my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years," stated Edward Siedle, a former Securities and Exchange Commission attorney who represents the former employee and took part in the discussions with prosecutors.
Concerning a number of its noncompliances, the fintech company refused to answer directly to NBC's questions. But in a statement, Block said that all of its merchants are already subject to routine sanctions screening and that outside counsel, consultants, and its in-house legal team are "advising] on the issue and appropriate remediation."
According to a Block representative, the business maintains a "wide-ranging and accountable compliance program" and continuously modifies its procedures to address "new risks and a changing sanctions regulatory landscape."
"Block's top priority is always enhancing the security and safety of our ecosystem. The spokesperson stated, "We have been and will continue to be dedicated to expanding on this work and making significant investments in our compliance program.
Earlier today, Whaleinsider reported that Changpeng Zhao, the former CEO of Binance, was sentenced to four months in prison for similar offenses. The founder admitted the charges against him in 2023, including permitting illegal transactions on Binance and neglecting to put anti-money laundering measures in place.
Binance is also dealing with individual charges from the Commodities Futures Trading Commission and the Securities and Exchange Commission.
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