Block sets aside $764 million for DOJ settlement as bitcoin profit halves

Block agrees in principle to $764 million Justice Department deal

Block has agreed in principle to pay $764 million to resolve a Justice Department investigation into anti-money-laundering controls at Cash App. The amount is larger than the $566 million profit Block reported for the third quarter.

The agreement was reached in October and disclosed in a 10-Q filing on Nov. 3. A 10-Q is a quarterly company filing with regulators.

The deal would defer a criminal charge for three years. The charge is that Block failed to maintain an effective anti-money-laundering program under the Bank Secrecy Act. Anti-money-laundering controls are systems meant to detect illegal money movement.

Key numbers from the quarter

• Settlement agreed in principle: $764 million
• Gross figure before credits: about $964 million
• Block third-quarter profit: $566 million
• Third-quarter gross profit: up 22% to $3.24 billion
• Cash App gross profit: up 27% to $2.07 billion
• Square gross profit: up 14% to $1.16 billion
• Bitcoin gross profit: down 50% to $52 million, from $104 million a year earlier
• Bitcoin revenue: down 11% to $1.8 billion

What Block disclosed in its filing

The $764 million figure is reduced from about $964 million after credits for earlier regulatory settlements. Block said those earlier payments account for part of a $200 million credit.

Block has accrued the full $764 million amount. It said losses above that amount are reasonably possible.

Block disputes the basis and methodology of the government's assessment. The deal still requires final approval.

A case that began with a short seller report

The investigation dates to March 2023. Short seller Hindenburg Research alleged that Cash App inflated user counts with duplicate and fraudulent accounts. It also alleged that weak identity checks let criminals use the platform for scams and money laundering. Block called the report inaccurate and misleading.

The Justice Department and the Securities and Exchange Commission opened inquiries into compliance practices and related disclosures. The SEC closed its side in March without recommending enforcement.

State regulators acted earlier. In April 2025, the New York Department of Financial Services fined Block $40 million. It found a backlog of suspicious-activity alerts that grew from about 18,000 in 2018 to more than 169,000 by 2020.

The New York regulator also found a screening system that did not block bitcoin transfers to wallets linked to terrorism financing until exposure passed 10%. A wallet is a digital account that holds crypto assets.

A multistate settlement in January 2025 added $80 million.

Facts confirmed and points still in dispute

Confirmed in the filing and company release are the $764 million amount agreed in principle, the three-year deferred prosecution structure, the earlier $40 million and $80 million payments, and the third-quarter figures listed above.

Block disputes how the government reached its assessment. It has not accepted the basis and methodology behind the figure.

Because final approval is still required, the $764 million deal is not yet final.

Why bitcoin profit fell by half

Block said the drop in bitcoin profit came from its own decision to cut fees on certain Cash App bitcoin transactions. It described this as part of a push to make bitcoin a payment tool rather than a trading product.

Block auto-enabled about 1 million Square merchants for Lightning payments in May. Lightning is a payment network built on bitcoin for faster, lower-cost transactions. It waived processing fees on bitcoin through 2026.

In October, Block launched a national advertising campaign built on spending bitcoin rather than holding it.

Revenue from bitcoin sales to customers, which Block books at gross, fell as the price dropped from about $114,000 to $70,000 over the year. Block held 28,355 BTC across its treasury and customer balances as of the first quarter, including about 9,000 in the corporate treasury. It said it continues to put 10% of bitcoin gross profit into purchases.

Why the settlement matters for Block's bank plan

The deferred prosecution structure means Block would avoid a conviction if it meets the agreement's terms over three years. The source noted that Binance took a similar path in 2023 at a cost of $4.3 billion.

The charge comes as Block pursues an industrial bank charter for a unit called Builders Bank. That unit would offer custody and fiduciary services for bitcoin. Custody means holding assets for customers.

Bank regulators weigh compliance history in charter decisions, according to the source.

What happens next

The agreement requires final approval. If approved, Block would follow the terms for three years under the deferred prosecution structure.

Source for this report

• Bitcoin Magazine