- Block, the fintech company founded by Twitter co-founder Jack Dorsey, is under federal investigation for alleged compliance failures and links to terrorist networks through crypto transactions.
- A former employee of Block has provided documents to the Southern District of New York, revealing compliance lapses, inadequate customer information collection, and the processing of crypto transactions for sanctioned countries and terrorist groups.
- The company is accused of processing thousands of transactions involving countries subject to economic sanctions, such as Cuba, Iran, Russia, and Venezuela.
Federal prosecutors are investigating Block, a fintech company founded by Twitter co-founder Jack Dorsey, for alleged compliance failures and links to terrorist networks through crypto transactions.
Bitcoin Transactions Linked To Terrorism Revealed
According to a report, the former employee disclosed that Block’s units, Square and Cash App, failed to collect sufficient customer information necessary for assessing risks. Additionally, Square processed thousands of transactions involving countries subject to economic sanctions, such as Cuba, Iran, Russia, and Venezuela. The documents provided to prosecutors identified numerous “small-dollar transactions” with entities in these sanctioned countries, some as recent as last year. The former employee emphasized that Block leadership and the board were aware of these compliance lapses.
Allegations of Compliance Failures
The investigation also revealed that the company founded by Jack Dorsey processed multiple crypto transactions for terrorist organizations, raising significant concerns about the company’s due diligence and compliance practices. The former employee alleged that most transactions involving Bitcoin, credit cards, and dollar transfers were not reported to the government as required. Block allegedly did not rectify the identified breaches, even after being alerted. According to the former employee and a second individual familiar with Block’s monitoring programs, the company’s compliance section was deemed “fundamentally flawed.”
Uncertain Future For Jack Dorsey’s Block
When NBC questioned Block about the ongoing probe, Block defended its compliance program, highlighting its commitment to adapting practices to evolving sanctions regulations and emerging threats. The company asserted a comprehensive compliance program incorporating systems, tools, and processes for sanctions screening and reporting. Block claimed that its voluntary self-disclosure to the Office of Foreign Assets Control (OFAC) resulted in a no-action letter indicating the closure of an investigation with no administrative action taken.
Conclusion
The federal inquiry into Jack Dorsey’s Block underscores the severe allegations of compliance failures and connections to terrorist networks through crypto transactions. The investigation highlights the firm’s alleged inadequate information collection, economic sanctions violations, and failure to report suspicious transactions. As the probe progresses, the implications for Block’s operations and regulatory standing remain to be seen. As of this writing, Jack Dorsey has not issued any official statements on the matter.
