Block, the fintech firm founded by Twitter co-creator Jack Dorsey, is under federal investigation for its cryptocurrency unit’s compliance practices.
According to NBC News, the scrutiny comes amid allegations that the company processed transactions linked to sanctioned countries and terrorist organizations due to inadequate compliance checks.
The investigation, which involves working with whistleblowers, is part of a broader probe into what are described as “widespread and yearslong compliance lapses” at Block’s Square and Cash App units. A former Block employee alleged that the compliance issues were systemic, claiming that “thousands” of questionable transactions had not been reported to the U.S. Office of Foreign Assets Control (OFAC), which enforces economic sanctions.
Further evidence provided by ex-employees includes over 100 pages of internal documents purportedly showing communications between Block and sanctioned countries such as Russia and Iran as recently as last year. These documents suggest that Block continued to engage with sanctioned entities even after becoming aware of potential abuses of its services.
In response to the allegations, Block said it did not knowingly violate international sanctions. The company also noted that its in-house legal team, along with outside counsel and consultants, are advising on the issue and working on appropriate remediation measures. Block added that it conducts regular sanctions screening on all its merchants, though it declined to directly address several specific questions about its compliance failures raised by NBC.
Last year, the US affiliate of cryptocurrency exchange Poloniex paid $7.59 million to settle its civil liability for apparent violations of US sanctions on certain countries. OFAC’s investigation found that Poloniex LLC conducted roughly 66,000 transactions valued at more than $15 million.
In 2022, Bittrex also agreed to pay $24.3 million to resolve similar charges. A year earlier, crypto payment provider BitPay paid $507,375 to settle violations of sanctions rules administered by the office.
