Fintech company Block, Inc. – formerly Square and founded by Jack Dorsey – has just been fined $40 million by the New York Department of Financial Services (NYDFS) due to serious loopholes in its anti-money laundering (AML) program, particularly related to Bitcoin transactions through its flagship product, Cash App.
This is one of the largest recent fines in the fintech and digital asset sector, reflecting the challenges that crypto and fintech companies face in complying with laws while scaling their operations.
Details of the Violation: When the System Could Not Keep Up with Growth Rate
According to findings from #NYDFS , Block's transaction monitoring system was not upgraded in line with the rapid growth of Cash App. This is particularly serious in controlling risks related to Bitcoin transactions – a type of digital asset that is inherently highly anonymous.
NYDFS points out that Block:
Did not build risk-based control measures,
Insufficient customer due diligence (KYC),
Allowed anonymous Bitcoin transactions to occur without proper vetting.
This behavior violates New York state regulations on money transfers and digital assets, which require businesses with a BitLicense to implement strict AML measures.
Block's Cautious Response: No Admission of Violation but Commitment to Improvement
While not admitting to any violations, #Block agreed to pay a $40 million fine and committed to improvements. The company will also hire an independent oversight party to ensure that the entire risk control system and compliance processes are comprehensively improved.
Notably, this is not the only fine. Earlier, in January 2025, Block accepted to pay $80 million to 48 other state-level financial regulators – all related to shortcomings in ensuring compliance with the law in the U.S.
Impact on the Market and Stock
Immediately after the information was published, Block's stock fell by 3.2%, trading around $54.13. Since the beginning of the year, the company's stock has dropped more than 30%, reflecting legal pressure and concerns from investors about the company's risk management and compliance capabilities.
This is a wake-up call not just for Block, but for the entire fintech and crypto industry that is rapidly developing worldwide.
Jack Dorsey – From 'Mr. X' to Blockchain Leader
Jack Dorsey – co-founder of the social media platform X (formerly Twitter) – resigned as CEO and left the board of directors of this company in October 2022. He then renamed Square to Block to emphasize a new direction: focusing on developing decentralized technology and Bitcoin-related products.
Most recently, in May 2024, Block announced that it would reinvest 10% of its profits from Bitcoin to purchase additional BTC monthly – a move that clearly affirms Jack Dorsey's 'pro-Bitcoin' stance.
However, this fine shows that no matter how ambitious, any business operating in the digital asset space cannot overlook compliance – especially in stringent markets like New York.
Lessons for the Crypto Industry and Users
This incident provides a profound lesson for the cryptocurrency community: risk control systems and anti-money laundering programs are vital when operating a product that integrates crypto transactions.
For users on major exchanges like Binance, choosing a platform with legal licenses and a tightly controlled compliance system is very important to protect their assets from unforeseen legal risks.
Major trading platforms today – including Binance – regularly invest in advanced AML tools and collaborate with regulators to ensure a transparent and safe trading environment for users.
Related to the Cryptocurrency Market
The incident of Block being fined is not just a legal issue for a company in the U.S. but also a signal that regulators are tightening the operations of platforms with crypto elements.
This could affect the growth rate of traditional crypto applications such as wallets, payment apps, or P2P trading platforms if there is no serious investment in monitoring and compliance systems.
However, looking at it positively, this is also an opportunity for crypto companies to 'clean up' their operations, assert their credibility, and promote broader acceptance from the general public and institutional investors.
Investment Risk Warning
The cryptocurrency market always carries high risks and is not suitable for everyone. The content of this article is for informational purposes only and is not investment advice. Users should do their own research and exercise caution before making decisions.