As a researcher with a background in financial compliance and investigative journalism, I find the ongoing probe into Jack Dorsey’s fintech company Block, Inc. by US federal prosecutors particularly concerning. The allegations of widespread compliance violations at Square and Cash App, as reported by NBC News, are serious and could have significant implications for the firm’s reputation and regulatory standing.
According to reports, the United States federal authorities are investigating Jack Dorsey’s financial technology company, Block, Inc., following the disclosure of internal documents by a whistleblower. These documents claim that Square and Cash App, two payment divisions of the firm, have been consistently violating compliance regulations.
According to a report by NBC News in May, a former employee of Block (previously Square) is said to have given documents to the prosecutors from the Southern District of New York. These documents allegedly reveal that Square and Cash App handled numerous transactions for users residing in countries under economic sanctions, as well as transactions involving crypto assets for suspected terrorist organizations.
I analyzed a subset of approximately 100 document pages that NBC News received. These documents revealed numerous small-value transactions with entities situated in nations under US economic restrictions, such as Iran, Russia, Cuba, and Venezuela.
The whistleblower revealed that a significant number of the deals discussed with investigators concerning credit card payments, regular currency, and Bitcoin (BTC) exchanges, had not been disclosed to the authorities.
The ex-employee claimed that Block failed to address the suspected violations of regulations when they were brought to its attention.
“From the ground up, everything in the compliance section was flawed,” they said.
“It is led by people who should not be in charge of a regulated compliance program.”
Another trustworthy insider, who spoke anonymously and possesses firsthand information about Block’s inner workings, corroborated the whistleblowers’ claims to NBC News.
Edward Siedle, a lawyer who previously worked for the Securities and Exchange Commission and now represents the whistleblower, expressed that, based on the available documentation, he believed that compliance violations had been acknowledged by Block’s leadership and board members in the past few years.
A representative from Block explained to NBC News that the company keeps a robust and continually updated compliance program in place, designed to address “new risks” and adjust to the ever-changing landscape of financial regulations.
A probe into Block, Inc. that has been reported recently is happening in the context of a broader wave of legal actions against cryptocurrency companies in the US.
On April 30, Changpeng Zhao, the founder of Binance, received a prison sentence of four months following his previous admission of guilt for not keeping Binance’s Anti-Money Laundering (AML) program in full compliance with the law.
As a researcher investigating recent developments in the cryptocurrency world, I came across an intriguing piece of news: On April 24th, I discovered that the co-founders of Samourai Wallet, a well-known crypto mixing and Bitcoin wallet service, were taken into custody on charges related to money laundering. The duo entered not guilty pleas in court following their arrest and were granted bail set at $1 million each.
On April 25, Consensys, a leading Ethereum development company, filed a lawsuit against the SEC, accusing the regulatory body of attempting to assert dominance over the cryptocurrency sector through its aggressive enforcement actions, which aim to classify Ether (ETH) as a security.
As a crypto investor, I’ve come across news that ConsenSys received a Wells notice from the Securities and Exchange Commission (SEC) on April 10th. This is a warning sign that the SEC may be planning to take enforcement action against them. However, it doesn’t automatically mean that an enforcement action will definitely follow. The company now has an opportunity to respond to the SEC before any further action is taken.
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2024-05-02 05:47