The stock is down 25% 
3 Likes
1 Like
It must be so much fun to work for one of these research firms.
“What did you do today?”
“Oh, not a lot, published some research which knocked billions off the value of a company.”
2 Likes
It seems that Block/Square has very poor or nonexistent KYC/AML practices, similar to a lot of other startup fintechs (e.g. crypto platforms). And those failures are generally explored by bad actors.
I won’t be surprised, if SEC and other regulators start to investigate those allegations, or maybe are already under their radar, if we add that they are also related to crypto trading, the probabilities increase.
And specially in this banking/financial institutions mistrust climate, it could be another victim.
3 Likes
Report does mention several notices from gov. agencies regarding their AML practice. It is very likely a few cases are already on the way, and this flashy report may trigger a few more.
To be honest, the report ain’t very damning. The hip hop songs are hearsay at best, the valuation has always been obvious to see for everyone, and whilst the lack of AML is very bad, in dollar term it still is tiny compared to every time a major bank got charged for ties with terrorism/criminal network/fraud.
Few lawsuits, big fines, obligations to comply with ID checks / income verification and it’s all water under the bridge.
Question is, is the business viable enough to survive under regulations? Well, the previous point about valuation was already clear; so far they’ve been incapable of being viable without.
Report ain’t bringing much to the table tbh 
2 Likes
Big difference is that Credit Suisse was Switzerland itself. Their identities were intermingled. Besides their historic ties to the biggest Swiss wealthy families and political persons, add to that their connections to world figures (power and money). It was always meant to be saved (no one wanted to upset their customers and shareholders, CoCo bondholders are another story). It was considered a systemic risk to the global financial system. Although it was fined in 11.4 billion USD in the last 20 years for their bad practices (almost 4 times the 3.25 billion USD that UBS promised to pay for CS).
Block is insignificant, if it goes to insolvency, no one important/relevant will be upset and no risk of contagion to the financial system. As they are related to crypto, it will be a bonus (and another example/alert to other exchanges). As SEC is pursing the US crypto exchanges, such Coinbase today (-13%):
Btw (from the above link):
Earlier this year, Coinbase reached a $100mn settlement with New York regulators over alleged anti-money laundering failures.
1 Like
I wasn’t talking about CS, or contagion risk 
Just pointing out that whilst Block’s AML practices are not great, the whole banking industry worldwide has been notoriously bad to follow those regulations.
Not quite as systematically as Block, but in dollar term Block is insignificant compared to traditional banking facilitation of money laundering.
Dunno why you invited CS to the party, they haven’t been good at keeping up with regulations but they never profited from criminal activities did they 
Just the last known issue, “Tuna Bonds”. 
It’s a very big generalization. There are very bad actors, but are others that follow the rules. That it’s a problem with media and regulatory communications, the news are about the bad examples, the good ones aren’t been made public the same way as the bad ones are (the news isn’t a dog biting a person, it’s the person biting the dog 
).
The regulated financial institutions have big regulatory costs, specially banks, and the retail deposit taking ones are the most regulated, the fintechs take advantage of that, as they have little regulatory costs.
