- US prosecutors are investigating Block, a cryptocurrency services company co-founded by Twitter co-founder Jack Dorsey, for alleged transactions linked to sanctioned countries and potential terrorist activities.
- A former employee has provided documents allegedly showing inadequate information collection from Square and Cash App customers to assess their risks.
- Block has reportedly processed transactions involving entities in countries subject to U.S. sanctions restrictions, such as Cuba, Iran, Russia, and Venezuela, as well as multiple cryptocurrency transactions for terrorist groups.
Block, a cryptocurrency services company co-founded by Jack Dorsey, is under investigation by U.S. prosecutors for alleged transactions linked to sanctioned countries and terrorist activities, according to a former employee.
Former Employee Alleges Compliance Failures at Block
A former employee has provided prosecutors from the Southern District of New York with documents allegedly showing that Block failed to collect adequate information from Square and Cash App customers to assess their risks. The documents reportedly show that most transactions, including credit card transactions, dollar transfers, and Bitcoin transactions, were not reported to the government as required. The former employee also alleges that Block failed to rectify company processes when alerted to these breaches.
Transactions Linked to Sanctioned Countries and Terrorist Activities
The documents provided by the former employee reportedly identify transactions, many involving small dollar amounts, with entities in countries subject to U.S. sanctions restrictions, such as Cuba, Iran, Russia, and Venezuela, as recently as last year. In addition, Block is said to have processed multiple cryptocurrency transactions for terrorist groups. The former employee also raised concerns about Block’s compliance section, alleging that the entire department is flawed from its foundation.
Block Addresses Compliance Concerns
While Block declined to address several compliance failures directly, the company issued a statement noting that its in-house legal team, outside counsel, and consultants are advising on the issue and appropriate remediation. Block also stated that it has already conducted regular sanctions screenings on all its merchants. In the fourth quarter of 2021, Block disclosed $1.92 billion in Bitcoin (BTC) sales, an increase from the third quarter but a decrease from the second quarter.
Conclusion
The investigation into Block highlights the ongoing regulatory challenges facing the cryptocurrency industry. As the sector continues to grow, it is likely that companies will face increased scrutiny from regulators and law enforcement agencies. It remains to be seen how Block will address these allegations and what impact this will have on the company’s future operations.
