Block, Inc. (XYZ) Faces Securities Class Action, Regulators Levy Cash App Fines Following Investigations Going Back to Hindenburg Report– Hagens Berman

Core Insights - Block, Inc. (formerly NYSE: SQ, now NYSE: XYZ) has faced significant scrutiny following a report by Hindenburg Research, which accused the company of overstating user counts and targeting underbanked criminal segments [1][2] - Federal investigations have been initiated regarding allegations of inadequate due diligence on Cash App users, leading to potential risks of money laundering and terrorism financing [2][3] - The company's stock price has declined sharply due to these allegations and subsequent regulatory actions, including a settlement of $80 million with state regulators and a $175 million order from the Consumer Financial Protection Bureau (CFPB) [4][5] Regulatory Investigations - Hindenburg Research's investigation included interviews with former employees and industry experts, revealing compliance lapses at Block's Square and Cash App platforms [2][3] - Federal prosecutors are investigating claims of widespread compliance failures, including processing transactions from sanctioned countries and facilitating cryptocurrency transactions for terrorist groups [3][5] - Block has acknowledged inquiries from the SEC and DOJ related to the allegations raised in the Hindenburg report, indicating ongoing cooperation with these agencies [5] Financial Implications - The company has faced substantial financial penalties, including an $80 million settlement and a $175 million order from the CFPB for failures related to user fraud on Cash App [4] - The class action lawsuit is being pursued by Hagens Berman, focusing on whether Block misled investors regarding its compliance practices [6] - The potential for further regulatory actions remains, as Block continues to navigate the implications of these investigations [5]