Overview
Cohen Milstein, together with co-counsel Lieff Cabraser, represents investors in a putative securities class action against Block, Inc., a financial technology company best known for its Square and Cash App platforms. The lawsuit also names Block’s CEO, Jack Dorsey, and CFO/COO, Amrita Ahuja, as defendants.
The lawsuit alleges that Block, Dorsey, and Ahuja misled investors about the strength of Block’s compliance protocols and the reliability of its reported user metrics for the Cash App platform. During the Class Period, the defendants repeatedly touted Cash App’s rapid user growth and asserted that its onboarding and transaction activities were supported by a robust anti-money laundering (AML) and know-your-customer (KYC) framework. In truth, however, Block’s streamlined onboarding process and weak compliance controls allowed for the proliferation of fake, duplicate, and illicit accounts—artificially inflating Cash App’s reported user base by up to 30%.
The truth began to surface in March 2023, when Hindenburg Research published a report accusing Block of inflating Cash App’s user base and facilitating fraud. The report prompted investigations by federal and state regulators and spurred a series of whistleblower disclosures. These developments, along with multiple corrective disclosures—including nearly $300 million in regulatory fines and Block’s admission that its reported user metrics included millions of unverified or duplicate accounts—revealed the extent of the alleged deception. As investors came to realize that Cash App’s reported growth was illusory, Block’s stock price plummeted more than 80%, erasing billions of dollars in market value.
Important Rulings
- On April 30, 2025, Judge Noel Wise of the United States District Court for the Northern District of California appointed Cohen Milstein co-lead counsel for the proposed class. In the same order, Judge Wise appointed Teachers’ Retirement System of the City of New York, New York City Employees’ Retirement System, New York City Fire Pension Fund, New York City Board of Education Retirement System, Police Superior Officers’ Variable Supplements Fund, Police Officers’ Variable Supplements Fund, Firefighters’ Variable Supplements Fund, Fire Officers’ Variable Supplements Fund, New York City Fire Department Life Insurance Fund, and Teachers’ Retirement System Variable A as lead plaintiff to represent the proposed class.
Case Background
Block is a financial technology conglomerate and financial services provider best known for Square, its point‑of‑sale payment platform for merchants, and Cash App, a consumer-focused digital wallet that enables users to conduct transactions and transfer money and bitcoin via mobile devices.
Throughout the Class Period, the defendants allegedly asserted that Block maintained robust AML and other compliance protocols designed to prevent the misuse of Cash App for illicit or criminal activities. For example, in periodic SEC filings, the defendants represented that Block had “implemented an AML program designed to prevent our payments network from being used to facilitate money laundering, terrorist financing, and other illicit activity.” The defendants further stated that this compliance program was “designed to prevent [Block’s] network from being used to facilitate business in countries, or with persons or entities, included on designated lists promulgated by the U.S. Department of the Treasury’s Office of Foreign Assets Controls and equivalent applicable foreign authorities.” The defendants also emphasized the scale and growth of Cash App’s user base—touting rising “monthly transacting actives” as a key indicator of Cash App’s future growth potential.
These and similar representations made by the defendants during the Class Period were allegedly materially false and misleading when made. In truth, and as defendants knew or recklessly disregarded, Block failed to implement even basic AML, KYC, and sanctions protocols. According to the complaint, this failure allowed Cash App to become a magnet for a range of criminal and illicit activities, including money laundering, child sexual abuse, sex trafficking, drug trafficking, terrorism financing, contract killings, and illicit payments to entities and persons subject to economic sanctions. Just as significantly, Block’s compliance failures directly undermined the integrity of its reported user metrics. The complaint alleges that Cash App’s design enabled and encouraged the creation of fake, duplicate, and fraudulent accounts on a massive scale, artificially inflating its reported user numbers by as much as 30%. Internally, Block tracked more accurate indicators—such as the number of accounts tied to verified Social Security Numbers—but did not disclose these figures to investors. Further, at the end of 2021, Block changed its key user metric for Cash App from “active customers” to an account-based “actives” metric, a shift designed to obscure the extent of duplicate, fraudulent, and illicit accounts on Cash App and that allowed the company to continue reporting apparent user growth even as true user growth was flatlining.
The truth began to emerge on March 23, 2023, when Hindenburg Research published a report based on extensive discussions with former Block employees. The report detailed how Block suppressed internal compliance concerns, disregarded red flags, and intentionally ignored AML laws, while also alleging that the Company inflated its user numbers by tolerating rampant fraud and fake accounts. Following its publication, the defendants allegedly continued to claim Block maintained robust and effective compliance controls and accurate user reporting. On August 3, 2023, Block disclosed in its quarterly securities filing that both the U.S. Securities and Exchange Commission and the U.S. Department of Justice were investigating the allegations raised in the Hindenburg Research report. Further scrutiny followed on February 16, 2024, when two whistleblowers came forward, alleging that Block operated a “shadow financial system beyond the reach of regulators” with negligible due diligence and significant manipulation of its customer metrics. By early 2025, Block had announced it would pay nearly $300 million in fines and consumer redress in connection with consumer fraud and AML violations related to Cash App.
Block’s share price dropped significantly following each of the above Class Period disclosures, accompanied by unusually high trading volume. In total, Block’s share price fell approximately 84%, from a Class Period high of $289 per share to just $46 per share, wiping out billions in market value.