Bitcoin Magazine

Jack Dorsey’s Block (XYZ) Sets Aside $764 Million for DOJ Settlement as Bitcoin Profit Halves

Block has agreed in principle to pay $764 million to resolve a Justice Department investigation into its anti-money-laundering controls, a sum larger than the $566 million profit the company reported for the third quarter.

The agreement, reached in October and disclosed in a 10-Q filed Nov. 3, would defer for three years a criminal charge that Block failed to maintain an effective anti-money-laundering program under the Bank Secrecy Act. 

The gross figure is about $964 million, reduced to $764 million after credits for earlier regulatory settlements. Block has accrued the full amount and said losses above it are “reasonably possible.” 

The company disputes the basis and methodology of the government’s assessment, and the deal requires final approval.

The settlement overshadowed a quarter in which gross profit rose 22% to $3.24 billion, with Cash App up 27% to $2.07 billion and Square up 14% to $1.16 billion, according to the company release.

 Bitcoin was the exception. Gross profit from the bitcoin business fell 50% to $52 million from $104 million a year earlier, and bitcoin revenue dropped 11% to $1.8 billion.

The investigation dates to March 2023, when Hindenburg Research alleged that Cash App inflated user counts with duplicate and fraudulent accounts and that weak identity checks let criminals use the platform for scams and money laundering. Block called the report inaccurate and misleading. 

The Justice Department and SEC opened inquiries into the compliance practices and related disclosures; the SEC closed its side in March without recommending enforcement.

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