January 30, 2026
On January 6, 2026, Judge Noël Wise of the U.S. District Court for the Northern District of California denied a motion to dismiss securities fraud claims against Block, Inc.—the parent company of Square and Cash App— and senior executives Jack Dorsey and Amrita Ahuja, allowing investors’ claims that Block misled the market about Cash App’s compliance practices and user metrics to proceed.
Judge Wise held that plaintiffs sufficiently alleged that Block misled shareholders about the strength of its compliance program and the size of Cash App’s user base. As lead counsel, Cohen Milstein represents lead plaintiffs, a group of New York City pension funds, on behalf of investors who purchased Block stock between February 26, 2020, and May 1, 2025.
The lawsuit focuses on alleged misstatements and omissions about Cash App, Block’s flagship mobile payments platform and a central driver of the company’s growth and valuation. Cash App allows users to send and receive money, invest, and access financial services through a single mobile phone app.
Plaintiffs allege that Block intentionally underinvested in anti[1]money-laundering, know-your-customer, and sanctions compliance to make Cash App easy to join and use and to fuel rapid growth, all the while assuring investors that its compliance program was robust and highly effective. According to the complaint, this approach led to large backlogs of unreviewed alerts and allowed many known bad actors to create large numbers of accounts used to facilitate illicit activities.
Plaintiffs also allege that Block overstated Cash App’s user growth by failing to disclose the extent of duplicate, fraudulent, and illicit accounts. When increased regulatory scrutiny later forced Block to tighten its compliance controls, the company allegedly changed how it calculated user metrics without fully informing investors, leading investors to make misleading comparisons between earlier and later figures and to overestimate Cash App’s growth rate.
Block, Dorsey, and Ahuja moved to dismiss the complaint. Judge Wise denied the motion, emphasizing that even statements that are literally true can be misleading if they omit material facts. Based on detailed allegations of chronic underinvestment in compliance, large alert backlogs, and the ease with which prohibited users could rejoin the platform, Judge Wise found it plausible that Block’s repeated claims about proactive anti-fraud efforts misled investors.
The court also upheld plaintiffs’ allegations that Block’s statements about Cash App’s user metrics were misleading. Judge Wise found that failing to disclose the prevalence of multiple accounts per user plausibly obscured the true size of Cash App’s user base. The court further rejected defendants’ argument that these statements were mere puffery, concluding they were specific enough for reasonable investors to rely on.
The court also found that plaintiffs adequately alleged scienter as to Jack Dorsey and Amrita Ahuja. According to the order, the complaint plausibly alleges that the executives had access to detailed internal information through board reports, compliance meetings, and employee feedback about duplicate accounts and fraud levels. Those allegations support the inference that Dorsey and Ahuja either knew their public statements were misleading or acted with deliberate recklessness in making them.
Finally, the court held that plaintiffs adequately pleaded loss causation. The complaint alleges that misleading statements about Block’s compliance program allowed bad actors to create multiple accounts, inflating reported user metrics and Block’s stock price. In March 2023, the alleged truth began to emerge with a report by Hindenburg Research, followed by investigations by multiple states and the Consumer Financial Protection Bureau. As these developments unfolded, Block’s stock price fell by 84 percent, from $289 to $46 per share. The court found the connection between the alleged misrepresentations and investors’ losses to be plausible.
The decision reinforces that technology companies’ statements about their compliance practices and user metrics must be grounded in reality. The ruling marks an important step toward accountability and transparency in the fintech and technology sectors, where user growth narratives often play a central role in valuation and market confidence.
The Defendants must now answer the amended complaint and the case moves into discovery, where investors will gain a clearer picture of whether Block’s public disclosures matched internal measurements of growth and compliance.