📰 Table Of Contents
Investigation into Block’s Compliance Lapses
Federal prosecutors are currently investigating Block, the financial technology company co-founded by Twitter’s Jack Dorsey, focusing on alleged compliance lapses at its central units, Square and Cash App.
Allegations Against Block
An ex-employee has disclosed documents highlighting various compliance shortcomings at Block, including inadequate customer information collection, processing transactions involving countries under U.S. sanctions, and facilitating cryptocurrency transactions for terrorist groups.
Compliance Challenges
The former employee alleges that thousands of transactions were not reported to the government as required, indicating significant regulatory challenges for Block.
Response from Former Employee’s Attorney
Edward Siedle, a previous attorney for the Securities and Exchange Commission (SEC), stated that compliance lapses were known to Block leadership and the board in recent years.
Cash App’s Compliance Risks
Cash App’s design reportedly increases the risk of compliance lapses due to customers’ rapid depletion of stored balances, limiting the ability to block or reject funds in time.
Regulatory Challenges and Recent Developments
Block’s regulatory challenges extend to a settlement between Sutton Bank, a partner of Cash App, and the Federal Deposit Insurance Corp. (FDIC) over alleged violations of anti-money laundering regulations. Recent departures from Block’s board of directors, including Lawrence Summers and Sharon Rothstein, have raised questions about corporate governance and oversight.
Block’s Profit from Bitcoin Sales
In Q4 2023, Block reported significant profits from Bitcoin sales via its Cash App platform. With a 90% increase in gross profit compared to the previous year, Block earned $66 million from Bitcoin transactions. The total sale amount of Bitcoin reached $2.52 billion, marking a notable 37% increase year over year.
Cash App’s success in Bitcoin trading has attracted a considerable number of new customers, with over 1 million first-time Bitcoin purchasers recorded in January 2023.
In December alone, the platform saw a 20% increase in Cash App Card monthly active users, totaling 23 million, outpacing the growth rate of total monthly activities.
Block also unveiled its accomplishment of designing a standalone three-nanometer (3nm) Bitcoin mining chip.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
