According to a report released by NBC on Wednesday, U.S. prosecutors are investigating Block, a company featuring cryptocurrency services co-founded by Twitter co-founder Jack Dorsey.
The allegations against the company involve accusations of processing transactions linked to sanctioned countries and potentially even individuals associated with terrorist activities.
During discussions with prosecutors from the Southern District of New York, a former employee provided documents allegedly demonstrating inadequate information collected from Square and Cash App customers to assess their risks.
According to the former employee, most transactions discussed with prosecutors, including credit card transactions, dollar transfers, and Bitcoin transactions, were not reported to the government as required. Furthermore, Block allegedly failed to rectify company processes when alerted to these breaches.
Approximately 100 pages of documents provided by the person 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 reportedly processed multiple cryptocurrency transactions for terrorist groups.
The evident trail supports allegations that Block continued to facilitate transactions involving sanctioned entities even after becoming aware of their misuse of its services.
The former employee also raised concerns regarding Block’s compliance section, alleging that the entire department is flawed from its foundation. They stated the individuals leading the compliance program were unsuitable for overseeing one.
A second person with direct knowledge of Block’s monitoring programs and practices echoed this assessment. Notably, NBC News granted both individuals anonymity to protect against potential reprisals.
While the fintech firm declined to address NBC’s inquiries regarding several compliance failures directly, Block issued a statement. The company noted that its in-house legal team, outside counsel, and consultants are advising on the issue and appropriate remediation. Block also noted that it has already conducted regular sanctions screenings on all its merchants.
At the end of February, Block, formerly known as Square, disclosed $1.92 billion in Bitcoin (BTC) sales for the fourth quarter of 2021. The sales increased compared to the third quarter but fell short of the results achieved in the second quarter.
During the fourth quarter of last year, BTC sales totaling $1.92 billion were conducted through the Block Cash App, resulting in profits of $46 million.
Meanwhile, Dorsey is a BTC supporter, believing that Bitcoin will ultimately contribute to abundant energy worldwide.