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Gainey McKenna & Egleston Announces A Class Action Lawsuit Has Been Filed Against Block, Inc. (SQ)

1. A class action lawsuit has been filed against Block, Inc. for compliance failures. 2. Allegations include involvement in illegal activities via Square and Cash App platforms. 3. Prior reports have shown significant stock price declines following negative news about Block. 4. Regulatory investigations by SEC and DOJ threaten Block's operational stability and reputation.

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Why Very Bearish?

The lawsuit and regulatory scrutiny could lead to significant reputational and financial damage, reminiscent of past scandals that disproportionately affected stock prices.

How important is it?

The article outlines serious legal implications for Block, which directly threaten its market position and could inspire broader market caution.

Why Long Term?

Ongoing investigations and potential regulatory actions can impact Block's operational performance and investor confidence over the long haul.

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SQCASH
NEW YORK, Jan. 20, 2025 (GLOBE NEWSWIRE) -- Gainey McKenna & Egleston announces that a securities class action lawsuit has been filed in the United States District Court for the Northern District of California on behalf of all persons or entities who purchased or otherwise acquired Block, Inc. (“Block” or the “Company”) (NYSE: SQ) securities between February 26, 2020 and April 30, 2024, inclusive (the “Class Period”). The Complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose that: (i) 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; (ii) 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; (iii) 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; (iv) Block allowed its customers to withdraw funds even after the accounts had been flagged for potentially illegal or illicit activities; (v) Block customers could open up multiple accounts using fake identities in order to engage in illegal or illicit activities; (vi) 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; (vii) 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 (viii) 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. On March 23, 2023, Hindenburg Research published a damaging exposé on Block titled: Block: How Inflated User Metrics and 'Frictionless' Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billion. On this news, the price of Block Class A common stock fell nearly 15%. Then, on August 3, 2023, Block disclosed that the U.S. Securities and Exchange Commission and the U.S. Department of Justice were investigating the allegations against Block and its employees contained in the Hindenburg Research report. On this news, the price of Block Class A common stock fell nearly 14%. Investors who purchased or otherwise acquired shares of Block should contact the Firm prior to the March 18, 2025 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com. Please visit our website at http://www.gme-law.com for more information about the firm.

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