Block Allocates $764 Million for Settlement with U.S. Justice Department, Moving Towards Deferred Prosecution for AML Deficiencies

Block, led by Jack Dorsey, has reached a preliminary agreement with the U.S. Department of Justice (DOJ) regarding an investigation into deficiencies in anti-money laundering (AML) measures, agreeing to a three-year deferred prosecution agreement.

In its third-quarter report submitted on November 3, Block, which operates Cash App and Square, revealed that it reached a preliminary agreement for deferred prosecution with the DOJ in October. The net payment is expected to be approximately $764 million (about ¥121.05 billion), pending final agreement and court approval.

The DOJ plans to postpone criminal prosecution for three years, alleging that the company violated the Bank Secrecy Act and failed to maintain an effective AML program. The financial burden associated with the agreement is estimated at around $964 million (about ¥152.7 billion), with the net payment expected to be about $764 million after deducting settlements with past regulators. The company has recorded this amount as of the end of September.

The investigation was initiated following a short-seller report published by Hindenburg Research in March 2023, which pointed out issues such as fraudulent accounts and deficiencies in identity verification on Cash App. Block argued that the report's content was inaccurate and misleading. Subsequently, the SEC (U.S. Securities and Exchange Commission) concluded its investigation in March 2026 and notified that it would not recommend enforcement actions. Meanwhile, the DOJ presented resolution terms in the same month.

If Block adheres to the agreement conditions over the three years, the DOJ will move to dismiss the prosecution. However, final agreement and court approval are required, and there remains the possibility of additional losses.

Third Quarter Sees Increased Profits, but Bitcoin Business Slows, Performance Outlook Upgraded

In its third-quarter earnings report, Block announced a gross profit of $3.24 billion (about ¥513.38 billion), a 22% increase year-on-year, with adjusted operating income reaching $923 million (about ¥146.25 billion), a 92% increase. The adjusted earnings per share were $1.13 (approximately ¥189), exceeding market expectations of $1.03 (approximately ¥163), leading to an approximately 8% rise in stock price during after-hours trading following the earnings announcement.

In its core business, Cash App's gross profit increased by 27% to $2.07 billion (about ¥327.8 billion), while Square recorded a 14% increase to $1.16 billion (about ¥183.75 billion). The number of monthly active users on Cash App reached 60 million as of September, with new consumer loan disbursements increasing by 40%.

On the other hand, the gross profit from the Bitcoin business halved from $104 million (about ¥16.47 billion) in the same period last year to $52 million (about ¥8.23 billion). Block explained that this was due to intentionally lowering some Bitcoin transaction fees on Cash App.

The company has raised its full-year 2026 adjusted earnings per share forecast from $4.04 (about ¥640) to $4.15 (about ¥657). For 2027, it expects a minimum gross profit growth rate of 15% and an adjusted operating income of $4.575 billion (about ¥724.68 billion), a 30% increase year-on-year.

With the final agreement with the DOJ still uncertain, Block will continue to pursue growth in its core business while addressing compliance issues.

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