Federal prosecutors are scrutinizing Block’s cryptocurrency division and working with a whistleblower to investigate the company’s compliance practices, two sources familiar with the matter told NBC News on Wednesday.
Due to inadequate verification, the company founded by Twitter co-founder Jack Dorsey reportedly processed cryptocurrency transactions linked to sanctioned countries and terrorist organizations. A source told NBC News. But the alleged lax cryptocurrency practices were just one part of “widespread, years-long compliance violations” at Block’s Square and Cash App divisions, the publication reported.
“Everything in the compliance section was flawed from the beginning,” a former Block employee told NBC News, claiming “thousands” of suspicious transactions went unreported. The U.S. Office of Foreign Assets Control (OFAC), which enforces economic sanctions.
Former employees recently provided this publication with more than 100 pages of what they said were internal documents from the former company, including records of interactions between the bloc and sanctioned countries including Russia and Iran since last year. The correspondence trace highlights allegations that Block continued to facilitate transactions involving sanctioned companies long after it became aware of the abuse of its services.
But Block’s statement to NBC insisted it did not knowingly violate international sanctions.
The fintech company declined to respond directly to NBC’s questions about its multiple compliance failures. But Block said in a statement that its in-house legal team and outside lawyers and consultants are “advising on this matter and appropriate resolution,” adding that it already conducts regular sanctions reviews of all franchisees.
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About the author
Elizabeth Napolitano is a data reporter covering business and technology news with a focus on cryptocurrency. Before she joined The Block, Elizabeth reported on BigTech, AI, crypto, and video games for CBS Moneywatch. As a CoinDesk reporter, she covered DeFi, NFTs, and US courts. She received a master’s degree in journalism from CUNY. X: Follow her at @LizKNapolitano.