Block Inc. Under Federal Investigation over Alleged Compliance Violations
Summary:
U.S. federal prosecutors are reportedly investigating Jack Dorsey's fintech firm, Block Inc., for alleged compliance violations in its payment divisions, Square and Cash App. A whistleblower backed by former Securities and Exchange Commission lawyer Edward Siedle, claims that the firm processed transactions for users in countries under economic sanctions. Block insists their compliance programme evolves to combat changing risks. This investigation follows a recent surge in legal action regarding U.S. crypto firms.
Prosecutors in the U.S. are apparently investigating Block, Inc., a financial tech company run by Jack Dorsey, following the emergence of a whistleblower. This person supposedly claims there are ongoing, widespread compliance breach issues at the company's payment divisions, Square and Cash App. Documents alleging that these branches processed thousands of transactions for users in countries with economic sanctions, alongside crypto transactions for terrorist factions, were apparently given to South New York prosecutors by an ex-Block worker. The whistleblower suggests that Block continued its business practices even after being notified of these alleged compliance breaches. NBC News was given about 100 pages of these documents, illustrating that most transactions were in small dollar amounts and originated from countries under U.S. sanctions such as Iran, Russia, Cuba, and Venezuela.
The whistleblower expressed dissatisfaction with the company's compliance section, stating it was run incompetently. A separate anonymous source, with insider knowledge of Block's operations, seemingly agreed with the whistleblower's allegations. Edward Siedle, an ex lawyer from the Securities and Exchange Commission who is representing the whistleblower, has inferred from document analysis that Block was aware of these compliance transgressions. Meanwhile, a representative from Block insists to NBC news that their compliance programme is both extensive and responsible, and regularly adapts to combat developing risks and the ever-changing sanctions regulation environment.
Block's investigation happens during a time of heightened legal activity towards U.S. cryptocurrency organisations. Changpeng Zhao, the founder of Binance, pled guilty for not upholding a legal Anti-Money Laundering programme at the exchange and was subsequently given a four month jail term. The co-founders of the Bitcoin wallet and crypto mixer, Samourai Wallet, were recently arrested on money laundering charges, later pleading not guilty and getting released on a $1 million bond. Furthermore, Consensys, an Ethereum development firm is taking legal action against the SEC. They suggest the SEC is trying to "seize control over the future of cryptocurrency" through actions that aim to class Ether as a security. The SEC sent a Wells notice to Consensys on April 10, which usually signifies an impending enforcement action.
Published At
5/2/2024 5:42:48 AM
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