Benzinga - by Murtuza Merchant, Benzinga Staff Writer.
Federal authorities are investigating the cryptocurrency operations of Block, the company co-founded by Jack Dorsey.
What Happened: Allegations suggest that Block’s crypto unit may have been involved in processing transactions linked to sanctioned nations and entities associated with terrorism, The Block reported, citing sources familiar with the matter that spoke to NBC News.
These claims have prompted a closer examination of the company's adherence to compliance standards, with whistleblowers providing key insights into the alleged infractions.
The investigation reveals potential “widespread and yearslong compliance lapses” across Block’s Square and Cash App divisions, highlighting serious concerns about the firm’s internal regulatory processes.
According to a former employee of Block, the compliance structure was fundamentally flawed, allowing “thousands” of questionable transactions to slip through without being reported to the U.S. Office of Foreign Assets Control (OFAC), which monitors compliance with economic sanctions.
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Further complicating the situation, ex-employees have reportedly supplied over 100 pages of internal documents that trace transactions between Block and sanctioned countries like Russia and Iran, continuing even after the abuses were supposedly recognized.
In response to these allegations, Block issued a statement denying any intentional breach of international sanctions.
The company outlined that it is working with both internal and external legal teams and consultants to address the issues and ensure proper remedial actions are taken.
Block emphasized its routine practice of conducting regular sanctions screenings for all its merchants.
As the digital assets sector continues to evolve amid increasing regulatory scrutiny, the importance of robust compliance frameworks cannot be understated.
What’s Next: This topic is set to be a focal point at Benzinga’s upcoming Future of Digital Assets event on Nov. 19, where industry leaders will gather to discuss the implications of regulatory challenges and the steps necessary to foster a compliant and thriving digital asset ecosystem.
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