Block Sets Aside $764 Million for DOJ Settlement as Bitcoin Gross Profit Halves
Block agreed in principle to a $764 million deferred-prosecution deal with the Justice Department over anti-money-laundering failures at Cash App, a sum above its $566 million third-quarter profit. Its bitcoin gross profit fell 50% in the same quarter after the company cut trading fees.
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The Settlement and Its Accounting
Block has agreed in principle to pay $764 million to resolve a Justice Department investigation into its anti-money-laundering controls, according to a 10-Q filed Nov. 3. The agreement, reached in October, would defer for three years a criminal charge that Block failed to maintain an effective anti-money-laundering program under the Bank Secrecy Act. The company has accrued the full amount and says losses above it are "reasonably possible." The deal still requires final approval, and Block disputes the basis and methodology of the government's assessment.
The gross figure is about $964 million, reduced to $764 million after credits for earlier regulatory settlements. Of those credits, the New York Department of Financial Services fined Block $40 million in April 2025, and a January 2025 multistate settlement added $80 million. Together these account for part of the $200 million credit against the DOJ number.
The Quarter's Mixed Results
Block reported gross profit up 22% to $3.24 billion for the quarter, with Cash App up 27% to $2.07 billion and Square up 14% to $1.16 billion, per the company release. The settlement figure is larger than the $566 million profit reported for the same quarter.
Bitcoin was the exception. Gross profit from the bitcoin business fell 50% to $52 million from $104 million a year earlier, while bitcoin revenue dropped 11% to $1.8 billion. Block attributes the decline to its own decision to cut fees on certain Cash App bitcoin transactions, part of a push to position the asset as a payment rail rather than a trading product. Revenue from bitcoin sales is booked at gross, so it also reflects the price decline from about $114,000 to $70,000 over the year.
Origins of the Investigation
The probe dates to March 2023, when Hindenburg Research alleged that Cash App inflated user counts with duplicate and fraudulent accounts and 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 SEC opened inquiries into compliance practices and related disclosures; the SEC closed its side in March without recommending enforcement.
State regulators acted first. New York's findings cited a backlog of suspicious-activity alerts that grew from about 18,000 in 2018 to more than 169,000 by 2020, and a screening system that did not block bitcoin transfers to wallets linked to terrorism financing until exposure passed 10%.
Structure and Strategic Context
A deferred-prosecution agreement means Block avoids a conviction if it meets the agreement's terms over three years, a path Binance took in 2023 at a cost of $4.3 billion. The timing matters because Block is pursuing an industrial bank charter for a unit it calls Builders Bank, which would offer custody and fiduciary services for bitcoin, and bank regulators weigh compliance history in charter decisions.
Block continues to hold bitcoin across its treasury and customer balances, 28,355 BTC as of the first quarter according to the company, including about 9,000 in the corporate treasury. It also continues to direct 10% of bitcoin gross profit into purchases. The company auto-enabled about 1 million Square merchants for Lightning payments in May, waived bitcoin processing fees through 2026, and in October launched a national ad campaign built on spending bitcoin rather than holding it.
Why It Matters
For Traders
The 50% drop in bitcoin gross profit reflects deliberate fee cuts, so Cash App bitcoin volume and fee-driven revenue should be read with that policy change in mind rather than as pure demand signals.
For Investors
A $764 million accrued liability and a pending bank charter application show that AML compliance history now directly shapes Block's strategic options, not only its legal exposure.
For Builders
Block's Lightning auto-enablement for about 1 million Square merchants and its fee waivers through 2026 signal that payment-rail integrations are becoming the default product path for bitcoin.
This article is for information only and is not financial advice. Read the full disclaimer.
