Block Fined $40M for Cash App’s Crypto Blunders: Missed Alerts & Compliance Chaos!

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Oh, the horrors! New York has slapped Block Inc. with a $40 million fine and a promise of “watchful eyes” after the company couldn’t keep its act together with Cash App’s bitcoin and fiat transaction monitoring.

The Big Apple Drops the Hammer on Block: Too Fast, Too Furious with Crypto and Cash!

On the 10th of April, the New York State Department of Financial Services (DFS) unveiled their verdict: Block Inc. is being fined a whopping $40 million and forced to hire an independent overseer after it was discovered that Cash App’s anti-money laundering (AML) and virtual currency systems were nothing short of a disaster.

Apparently, Block’s “explosive growth” was a little too fast for its own good—leaving regulators wondering if the company was in the business of dodging compliance instead of crypto. DFS pointed out that Block’s internal controls were as flimsy as a paper umbrella in a storm, particularly when it came to monitoring transactions for anything suspicious. And here’s the kicker: by 2020, Block had let a staggering 169,000 alerts pile up without even a glance! Can you say “whoops”?

“All financial institutions, whether traditional or as new as a crypto wallet, must adhere to rigorous standards that protect both consumers and the integrity of the financial system,” said Superintendent Adrienne A. Harris, who probably had to take a deep breath after reading this mess.

Oh, and don’t miss her next zinger: “Compliance functions must keep pace with company growth… or else.” As it turns out, Block’s rapid expansion left its compliance team running behind, creating all sorts of holes that shady characters could easily slip through. But fear not, New York’s regulator is stepping in to “fix” this chaos with an independent monitor. It’s like the crypto equivalent of a babysitter—who’s definitely not getting paid enough for this job.

But wait, there’s more! DFS also discovered some rather eyebrow-raising details in Block’s messy business. For instance, they found that the company didn’t bother screening transactions for links to terrorism until a recipient wallet’s exposure crossed a 10% threshold. Yes, you read that correctly—terrorism. That’s always a fun one to overlook!

The AML program run by Block… failed to adequately consider the substantial risks posed to an entity of its new size and complexity,” said DFS, clearly in disbelief.

And if you think that’s bad, get this: Between 2018 and 2021, Block’s backlog of unaddressed transaction alerts grew from 18,000 to more than 169,000! That’s a lot of ignored red flags, folks. But that’s not the worst part. From February 2021 to September 2022, suspicious activity reports (SARs) for both bitcoin and fiat transactions were filed… wait for it… over a YEAR after they were first generated. Can we get a round of applause for punctuality?

But here’s the cherry on top—Block thought transactions involving “mixers” (those handy little tools that help people hide their crypto trails) were only “medium” risk. Medium? You might as well hand out “Best Risk-Taker” awards with that logic. Despite the guidance, Block apparently believed these transactions weren’t as dangerous as, say, a speeding truck full of dynamite.

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2025-04-11 05:57