Block expects to pay $764 million to defer a laundering charge, as bitcoin profit halves

Block (NYSE: XYZ), the owner of Cash App and Square, said in its quarterly filing that it has reached an agreement in principle with the US Justice Department that would defer a money-laundering charge for three years, at a net cost of about $764 million. In the same quarter the gross profit of its bitcoin business fell by half, which the company ties to lower fees.

What the agreement would do, and what is still open

The Justice Department would defer for three years a charge that Block "failed to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act," the filing says. If Block meets the terms of a deferred prosecution agreement, the department would move to dismiss the charge with prejudice.

The agreement is expected to carry a gross monetary component of about $964 million and a net payment of about $764 million, after credit for earlier regulatory resolutions, the filing says. That is a difference of $200 million (computed). Block said it had accrued $764 million for the matter as of September 30.

The deal is not final. The filing says it "remains subject to reaching a final agreement satisfactory to all parties and court approval," and that "it is reasonably possible that those terms could result in losses in excess of the amount accrued."

Three years from a short-seller report

The inquiries began after a short-seller report in March 2023, according to the filing. The Securities and Exchange Commission staff told Block in March 2026 that it had concluded its investigation and did not intend to recommend an enforcement action. The Justice Department presented potential terms in March 2026 and the agreement in principle followed in October.

Bitcoin: revenue down 11%, gross profit down 50%

Block's bitcoin ecosystem, which the company says consists mainly of customer purchases of bitcoin in Cash App, Proto and bitcoin withdrawal fees, brought in revenue of $1.80 billion in the third quarter, from $2.02 billion a year earlier, a decline of 10.7% (computed). Gross profit on that revenue fell to $52 million from $104 million.

In its shareholder letter Block attributed the fall "primarily" to "a strategic decision to reduce the fee we charge on certain bitcoin transactions on Cash App." The letter's table shows bitcoin gross profit of $118 million in the fourth quarter of 2025, then $68 million, $72 million and $52 million in the three quarters of 2026, all below the $104 million of the third quarter of 2025.

The $52 million is 1.6% of Block's total gross profit of $3.24 billion (computed). Total gross profit was $3.24 billion, up 22%, and Cash App gross profit was $2.07 billion, up 27%. Net income was $564.1 million, against $461.6 million a year earlier. Block also booked a $229.7 million gain from remeasuring its own bitcoin investment, against $59.6 million a year earlier, which is separate from the customer business above.

Two numbers that do not depend on the bitcoin price

We think the quarter shows how little of Block's crypto exposure is about the price of bitcoin. The bitcoin line shrank, by the company's account, because it chose to charge less, and the legal amount, about $764 million, is larger than the quarter's net income of $564.1 million (computed ratio: 135%). Neither number moved with the market.

The opportunity is that bitcoin is now a small part of a business whose total gross profit grew 22%. The threat is that the agreement is not final, and the filing itself says the final cost could be higher. We would watch for the final agreement and its compliance terms, and for whether bitcoin gross profit stabilizes once the lower fee is in every comparison period. We do not forecast bitcoin prices, and this view would change if the final terms differ from those in the filing.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.