- Block’s crypto unit faces federal scrutiny for compliance lapses linked to sanctioned countries and terrorist groups.
- Allegations of flawed internal processes at Block’s compliance section raise significant concerns among investigators.
- NBC News reports show Block processed crypto transactions involving sanctioned countries and terrorist organizations.
Federal prosecutors are intensifying their scrutiny of Block’s crypto unit amid allegations of compliance lapses. A source familiar with the matter revealed to NBC News that investigators are collaborating with whistleblowers to probe the company’s practices.
“From the ground up, everything in the compliance section was flawed,” a former Block worker told NBC News, highlighting concerns about the company’s internal processes.
NBC News reported that Block, founded by Twitter co-creator Jack Dorsey, processed crypto transactions tied to sanctioned countries and even terrorist organizations due to inadequate checks. So, this revelation is just one aspect of the broader “widespread and yearslong compliance lapses” at Block’s Square and Cash App units.
“A former employee provided documents illustrating inadequate information collection from customers, thousands of transactions involving sanctioned countries, and even crypto transactions linked to terrorist groups,” NBC News reported. More so, a former Block employee described the compliance section as “flawed,” noting that numerous questionable transactions were not reported to the U.S. Office of Foreign Assets Control (OFAC).
Internal documents obtained by ex-employees detail exchanges between Block and sanctioned countries like Russia and Iran. This indicates the ongoing facilitation of transactions despite awareness of the entities’ misuse of services. So, in response, Block maintains it did not knowingly violate international sanctions. However, the company declined to address specific questions regarding compliance failures directly.
Allegations and Investigations Unveiled
Federal prosecutors, particularly from the Southern District of New York, are investigating Block’s internal practices.“Prosecutors met with the former employee after NBC News reported in mid-February that two other whistleblowers had told financial regulators about compliance failures at Cash App,” NBC News reported.
Furthermore, Edward Siedle, a former SEC lawyer representing the whistleblower. Emphasized that Block leadership and the board had been aware of compliance lapses in recent years.
Block’s Response and Ongoing Implications
Block responded to inquiries by defending its compliance program as “responsible and extensive,” highlighting continuous adaptation to threats and regulatory environments.
“Block has a responsible and extensive compliance program, and we regularly adapt our practices to meet emerging threats and an evolving regulatory environment for sanctions,” a Block spokesperson stated. Similarly, Jack Dorsey, co-founder of Block, posted a cryptic message on his X account—“follow the money”—following NBC’s report on compliance failures.
“The allegations can lead to significant legal and regulatory scrutiny of Block’s operations,” Siedle commented. Noting potential implications for Dorsey and the company.
The ongoing investigation into Block’s compliance lapses shows broader concerns about regulatory oversight within the cryptocurrency industry. Also, it raises questions about the accountability of fintech firms in ensuring adherence to international sanctions and financial regulations.
Conclusion
Federal prosecutors intensify their examination of Block’s compliance practices. The outcome of this investigation could have huge implications for the company’s operations and its leadership, including Jack Dorsey.
The scrutiny also highlights the growing regulatory challenges facing the cryptocurrency sector, showing the need for robust compliance frameworks to tackle risks associated with financial crime and illicit activities.
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from the company.
