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US Prosecutors Probe Jack Dorsey’s Block Over Compliance Issues

Regulatory agencies in the United States have opened an investigation into Block Inc. Investigators are looking into the firm after receiving information from a whistleblower that it enabled transactions from sanctioned nations and terrorist groups. Federal prosecutors have now confirmed an official investigation into the fintech firm.

Investigation Against Square and Cash App

The investigation is focused on the payment processing subsidiaries of the firm namely Square and Cash app. Prosecutors have rendered the services of a former employee from Block Inc. to provide documented evidence of the alleged involvement of the firm in illegal activities.

These documents were submitted to the Southern District Court of New York which contained transaction records that were carried out by Square and Cash app.

Most of the suspected transactions originated from users hailing from nations that have economic sanctions. Prosecutors have alleged that these transactions can be traced back to various terrorist groups as mentioned in the NBC report on 1st May.

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The 100 paged documents were also sent to journalists in NBC analysts. The analysts highlighted that a considerable number of these transactions took place in small dollar quantities originating from nations with US economic sanctions namely Cuba, Iran, Russia, and Venezuela.

Allegations Against Block

The information provided by the whistleblower further indicated that the majority of these transactions were processed through credit cards, fiat, and Bitcoin. The informant has alleged that most of these transactions were not reported to the government authorities.

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Furthermore, Block Inc. refrained from complying with regulatory requirements after it received a notification of the breach as per another allegation of its former employee.

The prosecutors have commented that from the baseline of the project; there are various compliance flaws. Additionally, the prosecutors claimed that the firm was headed by people who should not be in charge of the regulated compliance firm.

NBC reported an anonymous source with direct information regarding the internal structure of Block Inc. systems and attested to the allegations raised by the whistleblower. The informant in question is represented by former SEC lawyer, Edward Siedle.

He noted that the firm’s leadership and board members were aware of the regulatory violations since last few years.

A spokesperson for Block Inc. told NBC reported that the fintech firm has retained a responsible and detailed regulatory compliance program to cope with security risks and align with the changes in regulatory requirements.

Block Inc. Facing Regulatory Pushback on Account of Crypto Services

Another front where Block Inc. is faced with regulatory constraints is cryptocurrency services. During the last few months, US regulators have tightened the regulatory requirements around cryptocurrency firms operating in the United States.

CZ, the former CEO of Binance, was also sentenced to 4 months in prison on 30th April after pleading guilty to failure to incorporate sufficient AML program at the trading platform.

US regulators made arrests of Samourai wallet co-founders on money-laundering charges on 24th April. The duo has not pleaded guilty during the trial and released on a $1 million bond.

On the other hand, Ethereum development firm Consensys brought a lawsuit against the SEC alleging that the federal regulator has created a plan to overtake the future of the digital assets sector using law enforcement actions to prove Ether as a security.

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The lawyers of Consensys told journalists that the firm received a Wells notice from the SEC on 10th April. It is important to note that Well notice is considered a prerequisite and confirmation of an ensuing regulatory action against a firm by the regulatory agency.

Another Cointelegraph report indicated that Jack Dorsey the former CEO of Twitter has resigned from his position at the board of a decentralized social media platform called Bluesky.

The report confirmed his exit on 5th May with him noting that the social media platform was looking for a new board member. Dorsey negated a question on X that inquired if he was still a board member on the decentralized social media platform.


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Hassan Mehmood (Saudi Arabia)

Hassan is currently working as a news reporter for Tokenhell. He is a professional content writer with 2 years of experience. He has a degree in journalism.

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