Block (XYZ), the company led by Jack Dorsey, has agreed in principle to pay $764 million to resolve a U.S. Department of Justice investigation into its anti-money-laundering controls. The amount is larger than the $566 million profit the company reported for the third quarter.
$764 million reserve disclosed in 10-Q filing
The agreement was reached in October and disclosed in a 10-Q filed on Nov. 3. Under the arrangement, a criminal charge alleging that Block failed to maintain an effective anti-money-laundering program under the Bank Secrecy Act would be deferred for three years.
Block said the gross figure was about $964 million, reduced to $764 million after credits tied to earlier regulatory settlements. The company has accrued the full amount and said losses above that figure are reasonably possible. It also said it disputes the basis and methodology of the government’s assessment, and that the deal still requires final approval.
Core businesses grew, bitcoin did not
The settlement disclosure came during a quarter in which Block posted broader operating growth. According to the company release, gross profit rose 22% to $3.24 billion. Cash App gross profit increased 27% to $2.07 billion, while Square gross profit rose 14% to $1.16 billion.
Bitcoin was the exception. Gross profit from the bitcoin business fell 50% to $52 million from $104 million a year earlier, and bitcoin revenue declined 11% to $1.8 billion.
Investigation traces back to a 2023 short-seller report
The case dates to March 2023, when Hindenburg Research alleged that Cash App inflated user counts with duplicate and fraudulent accounts and that weak identity checks allowed criminals to use the platform for scams and money laundering. Block said at the time that the report was "inaccurate and misleading."
The DOJ and the U.S. Securities and Exchange Commission later opened inquiries into the company’s compliance practices and related disclosures. The SEC closed its side of the matter in March without recommending enforcement.
State regulators acted before the DOJ deal
State regulators moved earlier. In April 2025, the New York Department of Financial Services fined Block $40 million after finding a backlog of suspicious-activity alerts that grew from about 18,000 in 2018 to more than 169,000 by 2020. The regulator also found that a screening system did not block bitcoin transfers to wallets linked to terrorism financing until exposure passed 10%.
A multistate settlement in January 2025 added another $80 million. Those payments account for part of the $200 million credit applied against the DOJ figure.
Deferred prosecution and a bank charter application
The deferred prosecution structure means Block can avoid a conviction if it meets the agreement’s terms over three years. Bitcoin Magazine noted that Binance took a similar path in 2023 at a cost of $4.3 billion.
The charge arrives as Block seeks an industrial bank charter for a unit called Builders Bank, which would offer bitcoin custody and fiduciary services. Bank regulators weigh compliance history when deciding charter applications.
Block says lower bitcoin profit was a deliberate choice
Block said the drop in bitcoin profit came from its decision to cut fees on certain Cash App bitcoin transactions. The company described that move as part of a push to make bitcoin a payment rail rather than a trading product.
In May, Block auto-enabled about 1 million Square merchants for Lightning payments and waived processing fees on bitcoin through 2026. In October, it launched a national ad campaign centered on spending bitcoin instead of holding it.
Revenue from bitcoin sales to customers, which Block books on a gross basis, also fell as the bitcoin price dropped from about $114,000 to $70,000 over the year.
Bitcoin holdings remained in place
As of the first quarter, Block held 28,355 BTC across its treasury and customer balances, including about 9,000 BTC in the corporate treasury. The company also said it continues to put 10% of bitcoin gross profit into bitcoin purchases.
This report first appeared in Bitcoin Magazine and was written by Micah Zimmerman.
