Block Inc. in Talks with New York Regulators Over Bitcoin and Compliance Programs

Block Inc., the company founded by Jack Dorsey, is reportedly in negotiations with the New York State Department of Financial Services (NYDFS) to settle concerns over its Bitcoin and compliance programs. The news comes after the company disclosed in its latest Form 10-K filing that it is “continuing negotiations” with the NYDFS over “aspects of its Bank Secrecy Act/Anti-Money Laundering and Bitcoin programs.”

Block has been facing multiple regulatory and legal challenges, including investigations into its compliance framework and tax disputes. According to the filing, regulators from multiple U.S. states examined Block’s AML program between January 2021 and March 2023 and flagged alleged deficiencies related to Bank Secrecy Act compliance.

Settlements and Investigations

In January, Block reached settlements with several state money transmission regulators and paid $80 million in penalties. The company also appointed an independent consultant to review its AML program and ensure corrective measures were implemented as part of the settlement. However, the NYDFS was not part of this settlement and instead presented Block with proposed settlement terms in January.

Block has set aside an estimated liability for this matter, but the amount is not material to its financial statements. The company has not disclosed details of the settlement terms and has not acknowledged any wrongdoing.

Tax Dispute and SEC Investigations

Block is also dealing with a tax dispute in San Francisco, where local authorities claim it owes additional taxes on Bitcoin-related revenue earned between 2020 and 2022. The company paid $71.4 million to challenge the assessment but strongly disputes the claim and intends to seek a refund.

Additionally, Block is cooperating with inquiries from the Securities and Exchange Commission (SEC) and Department of Justice, which were launched following a report questioning its compliance and risk practices. The company is unable to predict the likely outcome of these investigations and cannot provide any assurance that they won’t have a material adverse effect on its business operations.

Shift in Focus to Bitcoin Mining

Block’s latest disclosure comes as the company plans to realign its focus toward the Bitcoin mining sector in 2025. In a November shareholder letter, it announced plans to scale down its music streaming service, TIDAL, and wind down its decentralized web project, TBD, as it expands into mining hardware through the Proto initiative.

For more news on cryptocurrency and blockchain developments, visit Global Crypto News.

Post Views: 1