July 24, 2024
Crypto

Jack Dorsey’s Block faces scrutiny from federal authorities over non-compliant crypto services: NBC News


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Federal prosecutors are scrutinizing Block’s crypto unit, working with whistleblowers to investigate the company’s compliance practices, two sources familiar with the matter told NBC News on Wednesday.

Due to inadequate checks, the company founded by Twitter co-creator Jack Dorsey allegedly processed crypto transactions linked to sanctioned countries and terrorist organizations, sources told NBC News. However, its allegedly laxed crypto practices are just one slice of the “widespread and yearslong compliance lapses” at Block’s Square and Cash App units, the publication reported.

“From the ground up, everything in the compliance section was flawed,” a former Block worker is quoted as saying to NBC News, claiming that “thousands” of questionable transactions went unreported to the U.S. Office of Foreign Assets Control, or OFAC, which enforces economic sanctions. 

Ex-employees furnished the publication with more than 100 pages of what they said was their former company’s internal documents, including records of exchanges between Block and sanctioned countries such as Russia and Iran from as recently as last year. The correspondence trail underscores claims that Block continued to facilitate transactions involving sanctioned entities long after it became aware of their abuses of its services. 

However, Block’s statement to NBC maintained it did not knowingly violate international sanctions.

The fintech firm declined to directly respond to NBC’s questions about several of its compliance failures. However, Block the company said in a statement that its in-house legal team, outside counsel and consultants are “advis[ing] on the issue and appropriate remediation,” adding that it already conducts regular sanctions screening on all its merchants.

 

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.



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