Is Jack Dorsey’s Block in Trouble? NYDFS Investigates AML Compliance

Company executives disclosed the matter in a dedicated report to the U.S. Securities and Exchange Commission (SEC). A few years prior, the firm had come under investigation by multiple regulators, who alleged it had violated AML protocols, including key provisions of the Bank Secrecy Act.

Currently, Block has settled with most states, though negotiations with New York authorities remain in progress.

In January 2025, NYDFS presented the Company with potential terms for resolving this matter, and the Company is engaging in conversations with NYDFS to determine whether this matter can be settled on acceptable terms,

 the company’s statement reads.

Though the company has not admitted guilt in any of these cases, it has consented to regulatory oversight in addressing certain management flaws and will pay an $80 million penalty. Additionally, it must bring in an independent consultant to evaluate its internal AML framework, a requirement that could also be imposed in its pending agreement with the NYDFS.

Legal Headwinds for Block

The report touches on a range of legal matters the company is facing. Among them, Block is currently engaged in discussions with multiple state attorneys general over concerns regarding Cash App, following complaints and feedback from customers. Company leadership has admitted that the outcome remains unpredictable, and it's still unclear whether any fines will be levied.

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The U.S. Department of Justice and the SEC have raised allegations against Block, citing deficiencies in its financial risk management. Although the company continues cooperating with regulators to avert litigation, it has made no promises to investors—either existing or prospective—about securing a favorable resolution. This uncertainty could dampen interest from long-term investors.

The Company is subject to various legal matters, investigations, subpoenas, inquiries, audits, claims, lawsuits and disputes, including with regulatory bodies and governmental agencies. The Company cannot at this time fairly estimate a reasonable range of exposure, if any, of the potential liability, if any, with respect to any of these other matters,

the company’s representatives stated.

Still, not all regulatory encounters have resulted in setbacks. One significant resolution involved a settlement with the Consumer Financial Protection Bureau (CFPB), where Block agreed to pay a $55 million civil fine and an additional $75 million to $120 million in restitution for affected Cash App users. This figure does not include the previously reported $80 million penalty. Over the past few years, the company has spent more than $200 million on settlements of this nature.

Block’s Bitcoin Tax Battle

Adding to its growing list of regulatory troubles, Block is now in a tax dispute with the San Francisco Treasury Department over unpaid Bitcoin-related taxes. Although the company has formally contested the claim, it still paid $71 million before requesting a refund, citing what it believes to be an unjustified tax demand. Given the notorious complexity of U.S. tax law, however, the reimbursement process could be protracted, and the outcome remains unpredictable.

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Even with these mounting regulatory pressures, Block continues to take a cooperative stance, engaging in discussions, preparing for potential penalties, and working to strengthen internal controls. Nevertheless, in nearly all of these cases, the company appears to be more reliant on regulatory decisions than its own strategic actions. The most probable outcome is a series of settlements, where Block pays fines and updates its internal processes to align with regulatory expectations.

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