Bitcoin
Block, the payments company led by Jack Dorsey, has agreed in principle to pay $764 million to resolve a U.S. Department of Justice investigation into alleged failures in its anti-money-laundering controls. The proposed settlement comes at a difficult time for the company’s Bitcoin business, which reported a 50% decline in gross profit during the third quarter.
According to a November 3 regulatory filing, the agreement was reached in October and would defer a criminal charge for three years. The allegations center on Block’s failure to maintain an effective anti-money-laundering program under the Bank Secrecy Act. The proposed resolution carries a gross monetary component of approximately $964 million, reduced to $764 million after credits for previous regulatory settlements. Block said it has already set aside the required amount.
The investigation began in 2023 following allegations about weaknesses in Block’s compliance systems and disclosures. A report from short seller Hindenburg Research had claimed that Cash App overstated its user numbers through duplicate and fraudulent accounts, while inadequate identity verification allowed criminal activity to take place on the platform. Block rejected those allegations as inaccurate and misleading. Separately, the SEC closed its investigation in March without recommending enforcement action.
Regulatory pressure had already increased in April 2025, when New York’s financial regulator imposed a $40 million penalty on Block over serious compliance deficiencies. The investigation found that a backlog of suspicious transaction alerts had increased from approximately 18,000 in 2018 to more than 169,000 by 2020. Regulators also identified weaknesses in the company's screening procedures for Bitcoin transfers involving wallets linked to terrorism financing.
The legal challenges coincide with declining profitability in Block’s Bitcoin operations. Bitcoin ecosystem gross profit fell 50% year over year to $52 million in the third quarter, compared with $104 million during the same period last year. Bitcoin-related revenue also declined 11% to $1.8 billion. Block attributed the drop in gross profit primarily to lower fees on certain Bitcoin transactions.
Despite the weakness in its Bitcoin business, Block's broader operations continued to expand. Overall gross profit increased 22% to $3.24 billion, supported by stronger performance in Cash App's lending and payment services. This suggests that the company's financial performance remains diversified, even as its cryptocurrency-related operations face pressure from lower fees and regulatory challenges.
For the broader crypto industry, the case highlights the growing financial and legal consequences of inadequate compliance systems. Payment companies and cryptocurrency platforms may face increasing pressure to strengthen customer verification, transaction monitoring, and anti-money-laundering procedures. For Block, the proposed settlement and declining Bitcoin profitability create two separate challenges: restoring regulatory confidence while improving the economics of its digital asset business.
