Key Points
- Block Inc is negotiating with the New York State Department of Financial Services (NYDFS) over Bitcoin and anti-money laundering compliance violations.
- The company is also involved in a tax dispute with San Francisco authorities over unpaid Bitcoin profit taxes from 2020 to 2022.
Block Inc, an American financial services and technology firm, is in the process of settling a case with New York’s primary regulatory agency. The company is reportedly in discussions with the NYDFS to resolve its Bitcoin and anti-money laundering compliance issues.
Protracted Legal Battle
This issue has been ongoing for several years, with the litigation reportedly starting between 2021 and 2023 when the SEC filed a case against Block over compliance problems.
Earlier this year, the US market leader in point-of-sale systems paid $80 million to settle cases with various state regulators. At that time, Block also disclosed that it had hired an independent consultant to help revamp its anti-money laundering policies.
However, the NYDFS was not part of the $80 million settlement deal. The firm and the agency had discussed different settlement terms in January. In its most recent SEC filing, Block stated it is still negotiating to reach an agreement. While the company has set aside funds for this, it stated that the amount is not significant to its finances.
Despite these ongoing discussions, Block has not admitted to violating any laws. The company has not disclosed any details about the settlement terms. The filing also warns that ongoing regulatory scrutiny could still impact its business. At the time of writing, Block’s stock had risen 2.10% in the pre-market, trading at $64.16.
Tax Dispute with San Francisco Authorities
In addition to this, Block is also engaged in a tax dispute in San Francisco. The state security agency alleges that the firm has not paid additional taxes on its Bitcoin profits from 2020 to 2022.
The fintech giant, however, strongly disagrees. The company has revealed that it has already paid $71.4 million to contest the claim and is seeking a refund.
Investigations into the company’s business practices by the SEC and the Department of Justice are still ongoing. In its filing, Block admitted that it is unable to predict the outcome of these inquiries.
As part of its strategic changes, the company plans to focus on Bitcoin mining and reduce efforts on its other projects. Block is scaling down its music streaming service, TIDAL, and closing its decentralized web project, TBD.
A shareholder letter confirmed this shift, stating, “We are prioritizing Bitcoin innovation.” This move is part of a broader effort to strengthen its position in the industry.
Earlier this month, MARA Holdings, a publicly traded cryptocurrency company, also announced its focus on Bitcoin mining. The company announced the completion of its acquisition of a wind farm in Hansford County, Texas.
