According to a report by NBC NEWS, a former Block employee has provided a series of documents to the Southern District of New York Attorney’s Office. These documents cover thousands of transactions processed by Square and Cash App for users in economically sanctioned countries, as well as evidence of cryptocurrency transactions processed for terrorist organizations.
About 100 pages of documents were provided to NBC NEWS, and the report indicates that the entities involved in the economically sanctioned countries include Iran, Russia, Cuba, and Venezuela, although most of the transactions were for small amounts. The former employee who made the report pointed out that most of these transactions involving credit cards, fiat currency, and bitcoin were not reported to the government.
Furthermore, the former employee also revealed that when Block was informed of these compliance issues, the company did not take corrective measures. The informant stated that a second anonymous source familiar with Block’s internal systems also confirmed the whistleblower’s accusations to NBC NEWS. Edward Siedle, a former Securities and Exchange Commission lawyer representing the whistleblower, stated that based on his understanding from the documents, the leadership and board of Block have been aware of these compliance issues in recent years but have not made improvements to address them.
In response, a spokesperson for Block told NBC NEWS that the company has a “responsible and comprehensive” compliance program that is regularly adjusted to address “emerging threats and evolving sanctions regulatory environment.”
This investigation into Block is part of a series of enforcement actions by US regulatory agencies against cryptocurrency companies. Previously, Binance founder Changpeng Zhao was sentenced to four months in prison on April 30 for failing to maintain proper anti-money laundering procedures on the exchange. On April 24, the co-founders of cryptocurrency mixer and bitcoin wallet Samourai Wallet were arrested on money laundering charges. On April 10, blockchain development company Consensys received a Wells notice from the SEC, prompting Consensys to sue the regulatory agency on April 25, accusing it of attempting to classify Ether as a security and thus “trying to control the future of cryptocurrency.”
