A federal investigation is currently underway in the United States into Block, Inc., a financial technology company founded by Jack Dorsey. The investigation follows the leak of documents alleging widespread compliance violations at the company's payment subsidiaries, Square and Cash App, by a whistleblower.

According to sources familiar with the situation, federal prosecutors in the Southern District of New York were presented with evidence of inadequate checks and crypto transactions involving sanctioned countries and terrorist organizations. The investigation revealed that Square and Cash App customers were not adequately informed of the risks associated with their transactions.

The documents provided by the former employee suggest that Square facilitated thousands of transactions with countries under economic sanctions, while Block was involved in handling crypto transactions for terrorist organizations. Despite being notified of these breaches, Block allegedly failed to address the issues in its compliance processes.

The whistleblower also provided evidence of transactions involving sanctioned entities like Cuba, Iran, Russia, and Venezuela, some dating back to last year. The documents indicate that compliance violations were known to Block leadership and the board in recent years.

In response to these claims, Block emphasized its commitment to maintaining a strong compliance program and adapting to evolving regulatory frameworks. The company stated that it regularly screens its merchants for sanctions and is working with legal counsel and consultants to address the compliance failures.

The investigation into Block, Inc. comes amid a wave of regulatory actions against crypto companies in the US. Recent cases include the sentencing of Binance's founder for anti-money laundering violations, the arrest of the co-founders of Samourai Wallet for money laundering allegations, and a lawsuit filed by Consensys against the SEC regarding the classification of Ether as a security.