Block, the firm behind Cash App, announced in its Quarter 3 Shareholder Letter that it will be winding down TBD, it’s “Web5” initiative in order to “invest in our bitcoin mining initiative… and Bitkey, our self-custody wallet for Bitcoin.”

TBD was split into two primary projects: “Web5,” which was described as “a new identity and trust layer for the internet,” and tbDEX, which was supposed to be focused on “reimagining global payments and commerce.”

The “Web5” component was yet to be integrated into any significant projects, and the tbDEX project was yet to launch for any transactions.

Read more: Block whistleblower says firm ignored compliance, allowed terror groups

Ending these projects will apparently allow Square to focus resources on its bitcoin mining initiative, which earlier this year announced it had finished development of its own mining chip that it intends to supply to Core Scientific. 

It apparently intends to supply Core Scientific with approximately 15 exahashes/second of hashing power, which would represent approximately 70% of the approximately 21.8 exahashes/second that Core Scientific reported in its most recent investor update.

However, Core Scientific has not substantially deployed Block’s chip, noting, “substantially all of the miners we own and host were manufactured by Bitmain.” 

BitKey, launched at the end of last year, is a multi-signature bitcoin wallet that integrates a hardware wallet and cloud recovery options.

Currently the revenue for all these different projects is rolled into the “Corporate and Other” category on the filings with music streaming service TIDAL and this segment reported approximately $44 million in revenue for the last quarter, driven almost exclusively by subscriptions, presumably to TIDAL.

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Jack Dorsey’s fintech firm Block is being probed by federal prosecutors after a former employee claimed that “everything in its compliance section was flawed” and that it’s “led by people who should not be in charge of a regulated compliance program.”

As reported by NBC, the whistleblower also claimed that Block and its business units Cash App and Square transacted crypto for terrorists, facilitated payments for sanctioned countries, and flouted compliance protocols.

The whistleblower — a former Block employee — reportedly provided 100 pages of documents to prosecutors from the Southern District of New York that show the alleged malpractice. 

The documents allegedly detail how Block processed numerous crypto transactions for terrorist-designated groups. Meanwhile, Square and Cash App allegedly failed to collect relevant information from customers that would help assess risks.

Square also reportedly facilitated thousands of transactions with countries under economic sanctions.

Read more: Blockstream and Block plan $12M off-grid solar Bitcoin mining farm in Texas

Despite being alerted to these alleged breaches, the whistleblower says the Block failed to change any company processes. They claim that a mix of the transactions discussed with prosecutors, including bitcoin, credit card, and dollar transfers, were not reported to the government under law.  

They told NBC News, “From the ground up, everything in the compliance section was flawed. It is led by people who should not be in charge of a regulated compliance program.”

These allegations of an inadequate compliance program echo claims from a research report published last year by short-sellers Hindenburg Research. This report alleged that “Cash App suppressed internal concerns and ignored user pleas for help as criminal activity and fraud ran rampant on its platform.”

Block execs allegedly knew compliance pitfalls

The former employee’s lawyer, Edward Siedle, who previously represented the Securities and Exchange Commission, said, “It’s my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years.”

A Block spokesperson told NBC News it voluntarily reported ‘thousands’ of the flagged transactions to the Office of Foreign Assets Control. The former employee, however, says this isn’t true.

The spokesperson added, “Block has a responsible and extensive compliance program and we regularly adapt our practices to meet emerging threats and an evolving sanctions regulatory environment.

“Continually improving the safety and security of our ecosystem is a top priority for Block. We have been and remain committed to building upon this work, as well as continuing to invest significantly in our compliance program.”

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The post Block whistleblower says firm ignored compliance, allowed terror groups appeared first on Protos.

Elon Musk’s X (formerly Twitter) is paying legal fees for a free speech lawsuit against Jack Dorsey’s company, Block. The irony is immediately obvious to long-time users of X: Dorsey co-founded Twitter, sold it to Musk so that he could focus on Block, and now X is paying to litigate against a Block employee.

Specifically, Chloe Happe v. Block Inc., involves a former Block employee who alleges that she was fired from her job at the company for statements she made on pseudonymous X accounts. She claims her two accounts were satirical and that she made the comments during private, non-working hours.

Nevertheless, despite the non-work related nature of these social media posts, Musk’s X is corporately funding her lawsuit against Block.

Don’t like Twitter censorship? Just buy it

Musk’s complaints against Dorsey’s version of censorship at Twitter were so great that he decided to simply acquire the platform outright. In 2022, Musk acquired Dorsey’s company in a transaction involving a group of investors.

Musk had previously criticized Twitter’s handling of obvious criminal activity like child exploitation while Dorsey was in charge. He now leads the censorship policy with plenty of examples of personal, editorial intervention.

Before Musk purchased Twitter, he vindictively promised to release ‘Twitter files’ that, in his opinion, would prove that Dorsey allowed politically motivated and US government-supervised content moderation on the platform. Musk was personally involved in revealing those files.

At the time, Dorsey fired back, criticizing Musk’s decision not to release all of these files at once, and questioning why he was involved in editorial decisions and crafting news media, rather than operating a social media platform for user (not owner) generated content.

Read more: Twitter is collapsing — and it’s hilarious

Even Dorsey had initially supported Musk taking the company private. Later, however, Dorsey said Musk’s decision was a mistake. “It all went south,” Dorsey lamented.

A regulatory filing did reveal that Dorsey retained a $1 billion stake in Twitter after it went private, maybe giving him a legitimate reason to be irked with Musk. That stake has shrunk precipitously, with X’s valuation dropping over 70% as of one post-acquisition financing round. Via this equity stake, Musk has caused Dorsey to lose money directly.

Not all conflict — they’re billionaires, after all

It’s not that Musk and Dorsey couldn’t cooperate on some things. Indeed, they both backed the Bitcoin Legal Defense Fund, for example, which helped Bitcoin developers successfully push back against Craig Wright’s torrent of lawsuits.

In another example, the two men had some back-and-forth over who actually controls so-called Web 3. Musk kidded about where he could find Web 3 — which barely exists. Dorsey cheekily agreed, placing it “between a and z,” a reference to venture capitalists Andreessen Horowitz (a16z). Both men have had historical conflicts with general partners at a16z. Mark Andreessen, for example, blocked Dorsey after several disagreements.

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Jack Dorsey, Twitter’s resident Bitcoin bull, has stepped down as chief executive (for the second and final time), and nominated chief technology officer Parag Agrawal as replacement, effective immediately.

Dorsey will continue to serve on Twitter’s board until a stockholder meeting in May 2022, when his term expires. 

He’ll also maintain a CEO role at his fintech venture Square, where Bitcoin features prominently in its major offerings like Cash App.

In a letter to Twitter staff shared on Twitter, Dorsey explained he’s quitting for good after 16 years at the social media giant, to allow it to flourish independently.

“There’s a lot of talk about the importance of a company being ‘founder-led.’ Ultimately, I believe that’s severely limiting and a single point of failure,” wrote Dorsey.

“I’ve worked hard to ensure this company can break away from its founding and founders.”

Dorsey is famously pro-Bitcoin, but his replacement is noticeably quiet about crypto. 

In his own letter, new chief Agrawal said he was honored and humbled to be chosen for the top job.

“I joined this company 10 years ago when there were fewer than 1,000 employees. I see Twitter’s incredible impact, our continued progress, and the exciting opportunities ahead of us,” said Agrawal.

Agrawal is a lesser-known face of Twitter’s exec team. Still, he comes backed by both outgoing Dorsey and the company’s board, which unanimously agreed to appoint Agrawal.

Twitter’s new independent board chair Bret Taylor said they have the upmost respect for its new chief exec.

“He has been instrumental in tackling our most important priorities, including accelerating our development velocity, and I know he’ll hit the ground running to strengthen execution and deliver results,” said Taylor in a press release.

Twitter chief’s single Bitcoin tweet

Compared to his predecessor, Twitter’s incoming chief exec hasn’t commented much about Bitcoin — or crypto at all. 

In fact, the only time Agrawal tweeted about Bitcoin was in 2019, after a trip to Nigeria. Both Agrawal and Dorsey were present at a crypto-centric conversation about Bitcoin in Africa.

Dorsey, on the other hand, isn’t coy about Bitcoin. A few weeks back, Twitter’s CFO said “it doesn’t make sense” to spend company cash on crypto, while Dorsey’s Square owns more than 8,000 BTC ($470 million), according to Bitcoin Treasuries.

Indeed, Dorsey headlined the Bitcoin Miami conference last year, funds Bitcoin Core developers via Square Crypto, and established COPA to defend Bitcoin’s white paper from Craig Wright. 

Dorsey even memefied a Bitcoin price clock to “blink in Morse code” about Russia during an online Senate hearing. The incident gave the Bitcoiner crowd ‘Moscow Time,’ which approaches zero as we near the hypothesized “Bitcoinization.”

As much as Dorsey sympathizes with Bitcoin maximalists, Twitter under Dorsey more-or-less publicly piloted Ethereum-powered features like Cent’s Valuables. 

In March, Dorsey used Valuable’s to sell his first-ever tweet as a non-fungible token. 

After bidding war with Justin Sun, blockchain entrepreneur Sina Estavi bagged Dorsey’s ‘genesis tweet’ for 1,630 ETH (worth $2.9 million then, $7.4 million today).

Dorsey dumped it immediately for Bitcoin before donating the funds to charity.

But while Dorsey has toured far-off places like Africa and Ethiopia to promote the benefits of Bitcoin, the most revealing Twitter post from his replacement relates to his hope of receiving a work-anniversary present at 10 years.

Read more: [Jack Dorsey wants to you to mine Bitcoin with new imaginary gizmo]

Agrawal’s wife has crypto VC connections

It should be noted that Agrawal’s wife Vineeta is a general partner at notorious token vacuum Andreessen Horowitz (known stylistically as a16z). 

However, the trained physician (Vineeta Agrawal attained a PhD) seems to focus on clinical investments over crypto.

Since January 2020, she’s headed up a16z’s bio fund. It has backed ventures in therapeutics, diagnostics, and digital health.

Elsewhere, a16z invests widely across the cryptocurrency ecosystem, particularly DeFi, and even appeared on cap tables for painfully exploitative projects like Worldcoin and BitClout.

Such wanton tokenenomics defies Dorsey’s maximalist mantra. There’s also signs that incoming CEO Agrawal has a more inclusive approach with Twitter’s own crypto development team. 

Twitter’s new chief exec tweeted to welcome a developer sporting an Ethereum-centric .eth domain earlier this month.

It’s likely Dorsey will channel his big Bitcoin energy into Square Crypto. In October, Dorsey said Square was looking into Bitcoin mining and hardware wallets.

A month later, Dorsey released a white paper for a peer-to-peer Bitcoin exchange tbDEX, which intends to also support fiat currencies.

[Read more: Jack Dorsey whipped out his Bitcoin clock and Twitter went wild]

In any case, Twitter’s Bitcoin-tinted glasses appear to be coming off. Even before taking the top job, Agrawal welcomed members of the wider crypto world to the Twitter team.

Agrawal was in charge of picking the lead for the social media firm’s crypto department and installed Mina Foundation board member Tess Rinearson. Mina Foundation received a $1.2 million grant from the Ethereum Foundation in September..

Twitter’s new head even also chose Zcash developer Jay Graber to head up Bluesky, Twitter’s decentralized social media standard.

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