As a long-term crypto investor and follower of the industry, I find the allegations against Block, a company co-founded by Jack Dorsey, extremely concerning. The potential complicity in processing transactions linked to sanctioned countries and terrorist activities is a serious matter that could have significant consequences for the company and its investors.
Based on a report published by NBC on Wednesday, U.S. authorities are currently examining Block, a business specializing in cryptocurrency solutions that was established by Jack Dorsey, a co-founder of Twitter.
The company is facing claims that it has handled financial transactions originating from restricted nations, as well as individuals suspected of ties to terrorism.
Former Employee Alleges Compliance Failures at Block
A former employee presented documents to prosecutors from the Southern District of New York, which they claimed showed insufficient customer data gathered by Square and Cash App for risk assessment purposes.
A former employee claimed that the majority of transactions we had discussed with prosecutors – which included credit card payments, wire transfers in dollars, and Bitcoin transactions – weren’t reported to the government as mandated. Additionally, it was alleged that Block didn’t address the company’s processes when notified about these lapses.
As an analyst examining the documents, I’ve identified approximately 100 pages detailing transactions, several of which involved small sums, with entities located in countries under U.S. sanctions, including Cuba, Iran, Russia, and Venezuela, up until last year. Furthermore, it has been reported that Block processed multiple cryptocurrency transactions for known terrorist organizations.
As a researcher examining the evidence at hand, I have uncovered a clear path of transactions suggesting that Block knewingly permitted dealings with sanctioned entities following their identification as such.
The ex-employee expressed doubts about Block’s compliance division, claiming that the entire structure of this department was fundamentally faulty. Specifically, they questioned the competence of those in charge of running the compliance program.
An individual who is privy to Block’s surveillance systems and procedures shared a similar perspective. Importantly, NBC News granted these two people anonymity to shield them from possible retaliation.
Block Addresses Compliance Concerns
The fintech company refused to comment specifically on NBC’s queries about various compliance lapses. However, Block released a statement. In this statement, they mentioned that their internal legal team, external lawyers, and consultants are currently working on finding solutions for the issue. Additionally, Block stated that they have previously carried out routine sanctions checks on all their merchants.
In my analysis as a financial expert, during the last quarter of 2021, Block, previously recognized as Square, reported Bitcoin (BTC) revenues amounting to $1.92 billion. This figure represents an uptick compared to the preceding quarter but failed to surpass the second quarter’s impressive outcomes, which stood at a higher value.
As an analyst, I’d put it this way: In the final three months of the previous year, a staggering $1.92 billion worth of Bitcoin transactions occurred via the Block Cash App, yielding a profitable gain of approximately $46 million.
As a Bitcoin analyst, I firmly believe that Dorsey shares this perspective. He holds the conviction that Bitcoin’s adoption will eventually lead to an abundant global energy supply.
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2024-05-02 17:32