Glancy Prongay & Murray LLP, a leading national shareholder rights law firm, announces that a securities fraud class action lawsuit has been filed on behalf of investors who purchased or otherwise acquired Block, Inc. (“Block” or the “Company”) (NYSE: SQ; XYZ) Class A common stock between February 26, 2020 and April 30, 2024, inclusive (the “Class Period”). Block investors have until March 18, 2025 to file a lead plaintiff motion.
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What Happened?
On March 23, 2023, Hindenburg Research published a report alleging that “Block has systematically taken advantage of the demographics it claims to be helping” and that the Company has demonstrated a “willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics.” The report also alleged that Block “has wildly overstated its genuine user counts and has understated its customer acquisition costs” and that Block’s approach to compliance “made it easy for bad actors to mass-create accounts for identity fraud and other scams, then extract stolen funds quickly.”
On this news, Block’s stock price fell $10.77, or 14.8%, to close at $61.88 per share on March 23, 2023, thereby injuring investors.
Then, on August 3, 2023, Block disclosed that the SEC and the U.S. Department of Justice were investigating the allegations made in the Hindenburg Report. On this news, Block’s stock price fell $10.03, or 13.6%, to close at $63.52 per share on August 4, 2023.
Then, on February 16, 2024, NBC News reported that federal regulators were probing allegations by two whistleblowers that Cash App performed inadequate due diligence on its users – including “‘no effective procedure to establish the[ir] identity’” – opening the door to potential money laundering, terrorism financing, and other illegal and illicit activities. On this news, Block’s stock price fell $3.84, or 5.5%, to close at $65.64 per share on February 16, 2024.
Then, on May 1, 2024, NBC News reported that federal prosecutors were investigating Block due to allegations by a former employee that Block had engaged in widespread and years-long compliance lapses at its two main units, Square and Cash App. Reportedly, the employee had provided prosecutors with internal Block documents demonstrating that Block had failed to conduct basic due diligence on its customers, that Square had processed thousands of transactions involving countries subject to economic sanctions (including Cuba, Iran, Russia, and Venezuela), and that Block had processed multiple cryptocurrency transactions for terrorist groups.
On this news, Block’s stock price fell $6.16, or 8.4%, to close at $66.84 per share on May 1, 2024, thereby injuring investors further.
What Is The Lawsuit About?
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) Block had engaged in widespread and years-long compliance lapses at Square and Cash App, including by failing to conduct basic due diligence regarding its customers’ identities or the nature of customer transactions so as to prevent the platforms from being used for illegal or illicit activities; (2) Block had effectively created a haven for widespread illegal and illicit activities on its Square and Cash App platforms by imposing minimal obligations on customers seeking to open accounts, transact, and deposit or withdraw funds; encouraging the use of bitcoin; and pressuring Block’s banking partners to forgo ordinary know your customer due diligence activities; (3) thousands of transactions on Square and Cash App were made in connection with a wide variety of illegal and illicit activities, including, inter alia, money laundering, child sexual abuse, sex trafficking, drug trafficking, terrorism financing, contract killings, and illicit payments to entities and persons subject to economic sanctions; (4) Block allowed its customers to withdraw funds even after the accounts had been flagged for potentially illegal or illicit activities; (5) Block customers could open up multiple accounts using fake identities in order to engage in illegal or illicit activities; (6) Block’s senior leadership and the Board of Directors had failed to correct identified compliance deficiencies despite numerous red flags, internal employee reports of deficiencies, and customer complaints; (7) Block’s Cash App user metrics had been artificially inflated through the use of fake accounts and the ability of criminals and other bad actors to open multiple accounts; and (8) as a result of the above, Block was subject to a material, undisclosed risk of its conduct being exposed, thereby exposing Block to reputational harm, adverse regulatory actions, the loss of business activity, and adverse impacts to Block’s operations and financial results; and (9) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
If you purchased or otherwise acquired Block securities during the Class Period, you may move the Court no later than March 18, 2025 to request appointment as lead plaintiff in this putative class action lawsuit.
Contact Us To Participate or Learn More:
If you wish to learn more about this action, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact us:
Charles Linehan, Esq.,
Glancy Prongay & Murray LLP,
1925 Century Park East, Suite 2100,
Los Angeles California 90067
Email: shareholders@glancylaw.com
Telephone: 310-201-9150,
Toll-Free: 888-773-9224
Visit our website at www.glancylaw.com.
Follow us for updates on LinkedIn, Twitter, or Facebook.
If you inquire by email, please include your mailing address, telephone number and number of shares purchased.
To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250122949062/en/
Contacts
Contact Us:
Glancy Prongay & Murray LLP,
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Charles Linehan
Email: shareholders@glancylaw.com
Telephone: 310-201-9150
Toll-Free: 888-773-9224
Visit our website at: www.glancylaw.com.
