Altcoins Talks - Cryptocurrency Forum
Crypto Discussion Forum => Cryptocurrency discussions => Topic started by: NotATether on May 02, 2024, 10:35:14 AM
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So apparently Block, the payments company launched by Jack Dorsey among others and owns Cash App, is in big trouble with regulators because they did not follow compliance practices which ultimately resulted in funds from Cash App and its payment processor ending up into criminal hands.
The word on the street:
United States federal prosecutors are reportedly probing Jack Dorsey’s fintech company Block, Inc. after a whistleblower surfaced documents alleging ongoing and widespread compliance violations at the firm’s payment arms Square and Cash App.
A former Block employee provided prosecutors from the Southern District of New York with documents allegedly showing that Square and Cash App processed thousands of transactions for users in countries subject to economic sanctions as well as crypto transactions for terrorist groups, NBC News reported on May 1
Roughly 100 pages of the documents were provided to NBC News, which reported many transactions were in small dollar amounts involving entities in countries subject to United States economic sanctions, including Iran, Russia, Cuba, and Venezuela.
The whistleblower said that most of the transactions discussed with prosecutors — which involved credit card, fiat, and Bitcoin
transactions — were not reported to the government.
Block did not correct its processes when it was alerted to the alleged breaches of compliance, the former employee alleged.
“From the ground up, everything in the compliance section was flawed,” they said.
“It is led by people who should not be in charge of a regulated compliance program.”
A second anonymous source with “direct knowledge” of Block’s internal systems also confirmed the whistleblowers’ allegations to NBC News.
Edward Siedle — a former Securities and Exchange Commission lawyer who represents the whistleblower — said it was his understanding from the documents that compliance breaches were “known to Block leadership and the board in recent years.”
So as you can see, apparently Block was doing some shady stuff and some employee became tired enough of it to become a whistleblower for the government.
It is unlikely that Block is not going to face any punishments despite their spokesperson rambling about how they are regulatorily compliant.
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So as you can see, apparently Block was doing some shady stuff and some employee became tired enough of it to become a whistleblower for the government.
Their own greed made them shady in front of government. They allowed transactions from those countries which had sanctions from the US government.
When you're working in US and you allow transactions from users of the those countries which have been economically sanctioned then you will have to bear the consequences.
They are now in eyes of the government and who knows what will happen to them next.
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- I'm not familiar with Block Inc. However according to the articles, there is a violation of this block, a transaction with a terrorist group. That's not very good. There was a transaction that the government did not know about. In short, the US government is bypassed.
The worst of it is that there is a whiletes blower that came out, so Block Inc. is probably ready. Especially if the evidence against them is strong. If it is proven that they should be given the appropriate punishment,.
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I remember this company when Jack was still the main guy but after his resignation or sale, I completely forgot if he sold or resigned. But when he is totally out of it, there are no more news that I have heard of it until this news came. I guess most of these payment processors and exchanges will always be the hot thing in the eyes of the regulators so if they have shady stuff done, they have to reverse their ways.
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Any company based and doing business in the United States must never allow transactions to proceed with people of countries under economic sanctions otherwise sooner or later there will be government agencies to go after it. I am a little bit surprised that it took a whistleblower to open the Pandora's box for Block Inc. Let's see how the government will be handling this case and if there will be some personalities that can be getting some prison terms or will there will be a huge fine to be imposed on the payment company. Block is not operating here in my country so am not so familiar with this platform but I see that this came into popularity all because of Jack Dorsey, a well-known cryptocurrency supporter and was associated a lot with the former Twitter (now X under Elon Musk). I guess 2024 will also be a year where cases are filed against crypto-related platforms for various forms of violations...am hoping the same will not be true in 2025.
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You just have to love the irony in this:
Roughly 100 pages of the documents were provided to NBC News, which reported many transactions were in small dollar amounts involving entities in countries subject to United States economic sanctions, including Iran, Russia, Cuba, and Venezuela.
In the exact same countries that chant all day for the death of the dollar and the US, you have a ton of individuals who would do everything possible including bribing and paying extra fees just to manage to either get dollars or do business with companies in the US! And I'm pretty sure that's just the tip of the iceberg, probably a lot more users bypassing that and the ones with huge money are already doing that covered by real IDs posing as either US or UK citizens.
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- I'm not familiar with Block Inc. However according to the articles, there is a violation of this block, a transaction with a terrorist group. That's not very good. There was a transaction that the government did not know about. In short, the US government is bypassed.
Block used to be called Square. Square was the financial payments company created by Jack Dorsey while he was CEO of Twitter. They invented Cash App (or bought it?) so if you have heard of Cash App, then that is the app that Block currently owns, and they are being investigated because some transactions in Cash App are violating sanctions, money laundering, etc.
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I guess 2024 will also be a year where cases are filed against crypto-related platforms for various forms of violations...am hoping the same will not be true in 2025.
I'd rather let them die sooner if they do shady things instead of letting them operate long enough to affect the market whenever shit happens to them. Then again the US government, or the SEC in this case, also claims something without proof[1] so their intention is questionable sometimes. I'm pretty sure if the data is true the Block is definitely in trouble though. That being said, what's the worst that will happen to them? I doubt the government will let the company die just like that.
[1] https://blockchain.news/news/sec-withdraws-lawsuit-against-debt-box-amid-misleading-evidence-controversy
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Their own greed made them shady in front of government. They allowed transactions from those countries which had sanctions from the US government.
When you're working in US and you allow transactions from users of the those countries which have been economically sanctioned then you will have to bear the consequences.
They are now in eyes of the government and who knows what will happen to them next.
So you mean any transaction coming in or out from those sanctioned countries will be taken as terrorist funding!!! It's new for me, well, IMO that's not how things should go, as transactions should be checked thoroughly like for what purpose it was used, I mean who sent it and who received it. Does the receiver belong to a bad actor in the community and using that money for bad purposes? Rather than tagging TX as illicit just because several sanctioned county's citizens received those funds.
I might be wrong with my POV but it's just a thought. Plus it's great that the employee of the block company gave the information to the Government so more bad tx can't be made. I actually read that mostly those people preferred it who don't want to use banks or have bank accounts as they can still deposit and withdraw funds from it via ATMs and crypto etc.
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Any company based and doing business in the United States must never allow transactions to proceed with people of countries under economic sanctions otherwise sooner or later there will be government agencies to go after it. I am a little bit surprised that it took a whistleblower to open the Pandora's box for Block Inc. Let's see how the government will be handling this case and if there will be some personalities that can be getting some prison terms or will there will be a huge fine to be imposed on the payment company. Block is not operating here in my country so am not so familiar with this platform but I see that this came into popularity all because of Jack Dorsey, a well-known cryptocurrency supporter and was associated a lot with the former Twitter (now X under Elon Musk). I guess 2024 will also be a year where cases are filed against crypto-related platforms for various forms of violations...am hoping the same will not be true in 2025.
Could be deep undercover FBI.
FBI likes candidates with account training along with law enforcement training. They will plant a person in a company in order to have a whistleblower. The whistleblower blower won’t even know he was guided by the under cover FBI agent.
It is in the New York southern district they are really good at winning a case. I am guessing they will be fined at the least.
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So you mean any transaction coming in or out from those sanctioned countries will be taken as terrorist funding!!!
No, you got me wrong, I haven't said anything about terrorist funding in my reply. The countries that have economic sanctions are not allowed by the government and if a company accepts transactions from those countries even from good citizens of those countries who don't do any criminal acts are also not free from the sanctions.
Let's say if a company that's operating in US and the company is allowing transactions from those countries which have been sanctioned by the US then all those allowed transactions are unallowed and somewhat illegal. That's why I was trying to say, and once again I wasn't saying anything about terrorist funding even in my original comment, you should read it once again.
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Block used to be called Square. Square was the financial payments company created by Jack Dorsey while he was CEO of Twitter. They invented Cash App (or bought it?) so if you have heard of Cash App, then that is the app that Block currently owns, and they are being investigated because some transactions in Cash App are violating sanctions, money laundering, etc.
Another negative news for the crypto market right when investors are worried about the tokens price decline for many weeks and there is no sign of recovery 8) I hope Jack Dorsey can do something to arrange and cooperate with the investigation agency to resolve this trouble and ensure that Block will not be abused by bad actors.
I don't hope Block will go bankrupt or Jack Dorsey will face severe punishment. Block is a well-known company in the crypto market, and so is Jack Dorsey. A scandal with them can directly impact the crypto market at this sensitive time, even triggering investor fear and pushing the BTC price back to $4xK. I only expect a gentle correction before the bullrun in Q3-Q4 this year, not a serious decline that could take the market more time to recover.
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No, you got me wrong, I haven't said anything about terrorist funding in my reply. The countries that have economic sanctions are not allowed by the government and if a company accepts transactions from those countries even from good citizens of those countries who don't do any criminal acts are also not free from the sanctions.
I got your point dude, I was not trying to say you did, actually I was trying to conclude a fact from your reply and from the OP's reply. So sorry that I mixed things up, I should have mentioned the OP's name in that part. But if we look closely that's what these governments are doing. This means if a person for example this platform made tx with those sanctioned countries.
Even if the tx is not shady, they still link this tx or call them terrorist funding. Because they can do that, they have the power. That's what happens when a person does illegal work. Although this should be stop, as proper monitoring of such platforms is necessary. Although its not an easy task in itself, but still. Audit should be done regularly, accountancy should be done regularly in order to stop such illicit activities.
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This is my first time of hearing such name. It is unfortunate that an insider betrayed the organisation they work for after signing up as an employee to the organisation.
I am not in any way supporting the block Inc for their behaviour but this should be an eye opener for others to see that no matter the hidden secrets one day it would be revealed. In this case it was a staff of the organisation that did that. What an employee!
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So you mean any transaction coming in or out from those sanctioned countries will be taken as terrorist funding!!! It's new for me, well, IMO that's not how things should go, as transactions should be checked thoroughly like for what purpose it was used, I mean who sent it and who received it. Does the receiver belong to a bad actor in the community and using that money for bad purposes?
And how do you think this would work?
I can see how the US government calls Iran and asks them
-Stop lobbying rockets for a while and do tell us, is Hashem Soleimani the guy who is smuggling chips or was that Masem Souleimani, we have 500k pending and we need to know if this is college money or bomb money!
It's sanctioned "countries" for a reason, otherwise, you would only have sanctioned 'individuals" who would do all those transfers with their wife/son/nephew account.
Put the question otherwise, if you know a country is against you using one of their companies, why do you still want to use it?
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So you mean any transaction coming in or out from those sanctioned countries will be taken as terrorist funding!!! It's new for me, well, IMO that's not how things should go, as transactions should be checked thoroughly like for what purpose it was used, I mean who sent it and who received it. Does the receiver belong to a bad actor in the community and using that money for bad purposes?
You could circumvent that with a VPN or Tor though. Tor is better since many VPNs are owned by the same few companies, and also the fact that the no logs policy is most of the times BS, they usually keep logs so that they don't have to go to jail for you.
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So you mean any transaction coming in or out from those sanctioned countries will be taken as terrorist funding!!! It's new for me, well, IMO that's not how things should go, as transactions should be checked thoroughly like for what purpose it was used, I mean who sent it and who received it. Does the receiver belong to a bad actor in the community and using that money for bad purposes?
You could circumvent that with a VPN or Tor though. Tor is better since many VPNs are owned by the same few companies, and also the fact that the no logs policy is most of the times BS, they usually keep logs so that they don't have to go to jail for you.
I have always suspected Tor as a can of red paint use to help warn governments etc.
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These American companies that violate US laws and provide payment facilities to countries subject to US sanctions have two reasons: either because they want to get money in any way, even by violating the laws, or they see these sanctions as unjust to these countries and they violate the sanctions.
I am against the first reason, but I support the second, and with the violation of these sanctions by these companies, I salute them, because the citizens residing in these countries subject to sanctions have no fault or any connection to politics, so why does the United States impose sanctions on them?
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There are hundreds of companies in the United States that continue to do business with Russia, which is "supposed" to be a sanctioned country. And I say "supposed" because money, at the end of the day, is still money, just like business. One thing is how governments want to project sanctions internationally for starting a war and quite another is what happens between companies in private, everything is hypocrisy.
Regarding the way Block Inc. acts, I don't think there is much more to add, greed in its purest form to continue accumulating money without regard to sanctions or ethics or morals. Something that does not surprise me in the businesses that Jack Dorsey gets into, although the press has always called him the technological genius.
This is a very interesting article from Fortune that elaborates on what I said in the first paragraph: Over 300 U.S. companies still operate in Russia (https://fortune.com/2024/03/04/over-300-us-companies-still-operate-in-russia-risk-being-complicit-in-the-kremlins-war-crimes/).
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There are hundreds of companies in the United States that continue to do business with Russia, which is "supposed" to be a sanctioned country. And I say "supposed" because money, at the end of the day, is still money, just like business. One thing is how governments want to project sanctions internationally for starting a war and quite another is what happens between companies in private, everything is hypocrisy.
What makes this case so special to them though is because this is a financial company offering payment services, it can be easily abused for money laundering by all sorts of sanctioned entities and then the SEC gets invoked, OFAC gets involved, and so on. There are a lot more "sniper feds" with the targets on fintech than most other industries.
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What makes this case so special to them though is because this is a financial company offering payment services, it can be easily abused for money laundering by all sorts of sanctioned entities and then the SEC gets invoked, OFAC gets involved, and so on. There are a lot more "sniper feds" with the targets on fintech than most other industries.
The problem itself is not that the system can be abused for money laundering, for that there are several mechanisms and filters that once applied would make it very difficult to commit these acts. The problem is that the system sometimes "invites" these acts. With very lax AML policies, with holes in the system depending on which countries the money comes from, with low commissions to attract more clients without applying the filters that I mentioned before... If AML policies were strictly enforced, the annual profit would be much, much lower than the current percentage, and logically, companies that process payments are not interested in that.
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The problem itself is not that the system can be abused for money laundering, for that there are several mechanisms and filters that once applied would make it very difficult to commit these acts. The problem is that the system sometimes "invites" these acts. With very lax AML policies, with holes in the system depending on which countries the money comes from, with low commissions to attract more clients without applying the filters that I mentioned before... If AML policies were strictly enforced, the annual profit would be much, much lower than the current percentage, and logically, companies that process payments are not interested in that.
For a small company, yes. A large payments company like PayPal can afford to cut off many customers and take a hit in its revenue because it would be quite a small percentage of their net profit.
The smaller payment processors and the ones with a negative profit would be the ones most tempted into getting more customers by having more lax anti money laundering policies.
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For a small company, yes. A large payments company like PayPal can afford to cut off many customers and take a hit in its revenue because it would be quite a small percentage of their net profit.
The smaller payment processors and the ones with a negative profit would be the ones most tempted into getting more customers by having more lax anti money laundering policies.
What you say is true, it is small businesses that can be tempted to "forget" certain important points. In any case, large companies (PayPal for example) may have more flexibility as you say, but always in a measured and planned way, otherwise they could also have problems. One of the problems (although depending on who it is an advantage) is that there are many payment processors based in hundreds of countries operating in hundreds of other countries, but the laws from country to country can be very different.