Block, Inc. has agreed to a $40 million settlement with the New York Department of Financial Services (NYDFS) for “significant failures” in its anti-money laundering compliance program, the Wall Street regulator announced on Thursday.

The company led by Jack Dorsey has agreed to retain an independent monitor after violating the Department’s money transmitter and virtual currency rules, the NYDFS added.

The NYDFS found that Block’s company had “inadequate customer due diligence” and failed to implement systems sufficient for preventing money laundering and illicit activity.

Block’s services were “vulnerable to criminal exploitation,” the NYDFS said, arguing that Block’s “lax treatment” of Bitcoin transactions allowed largely anonymous transactions to evade scrutiny.

“Compliance functions must keep pace with company growth or expansion,” NYDFS Superintendent Adrienne A. Harris said in a statement.

With its so-called BitLicense, Block’s Cash App had been regulated under the NYDFS as a virtual currency business since 2018.

Last year, Cash App ended its support for free peer-to-peer (P2P) Bitcoin payments, while leaning into other cryptocurrency services that users have gravitated toward.

Edited by James Rubin

OpenAI says Elon Musk didn’t just leave the company; he tried to take it over, and the AI research giant says it has the emails to prove it.

In a newly filed countersuit, OpenAI accuses Tesla CEO Elon Musk of attempting a hostile takeover of the company he helped found, using what it called “bad-faith tactics” and a “self-serving narrative.”

OpenAI seeks to block Elon Musk’s alleged campaign of harassment and disruption, centered on a sham $97 billion takeover bid, while seeking compensatory and punitive damages to be determined at a possible trial, along with injunctive relief to prevent further interference.

“These antics are just history on repeat—Elon being all about Elon,” OpenAI’s official newsroom wrote in a scalding post on X as it shared internal emails showing Musk pushing to convert OpenAI into a for-profit entity.

While Musk has consistently argued that OpenAI strayed from its original nonprofit mission, OpenAI alleges Musk himself was the first to push for a structural overhaul, so long as he was in charge.

As shown in the emails, in November 2015, Musk began questioning OpenAI’s structure in an email to CEO Sam Altman, writing that a “standard C corp with a parallel nonprofit” would likely align incentives better. 

Decrypt has yet to independently verify the emails put forth by OpenAI. Representatives for Musk’s companies, Tesla and SpaceX, did not immediately respond to Decrypt’s request for comment.

For-profit necessity

In June and July 2017, as OpenAI’s need for compute scaled with its Dota 2 experiments, Musk allegedly  encouraged expansion, writing, “Let’s figure out the least expensive way to ensure compute power is not a constraint.”

And that summer, discussions shifted. On July 13, 2017, Musk allegedly agreed a for-profit model might be necessary. Days later, he warned that China’s AI ambitions were another reason to “change course.”

OpenAI claims that in September 2017,  Musk made his move, pushing for “initial control” over OpenAI’s board in exchange for capital and demanding to be CEO. 

Emails from that month show him proposing a structure where he’d appoint four out of seven board seats. “I would unequivocally have initial control of the company,” he allegedly wrote.

OpenAI alleges Musk also directed his team to incorporate a for-profit shell company, Open Artificial Intelligence Technologies, Inc., with plans to rehouse OpenAI’s IP under it.

Pushback

But OpenAI pushed back. In a candid message, co-founders warned that Musk’s structure risked creating an “AGI dictatorship.” 

They rejected the terms. Musk’s response: “Discussions are over. I will no longer fund OpenAI.”

In January 2018, Musk allegedly proposed spinning OpenAI into Tesla, saying it was the only way to raise the billions needed. “OpenAI is on a path of certain failure relative to Google,” he wrote. 

According to OpenAI, the team declined again, unwilling to become a Tesla subsidiary. By February 2018, Musk resigned as co-chair and parted ways with OpenAI.

Years later, he has now returned, and this time through the courts.

In March, Musk’s lawsuit against OpenAI sought to block its transition to a capped-profit structure. A U.S. judge denied the injunction but agreed to an expedited trial, set for fall 2025.

OpenAI had previously released Musk’s emails earlier last year in response to the lawsuit, painting a picture of a founder who, despite his public stance, was already advocating for profit, exclusivity, and consolidation, years before filing suit.

Amid the chaos, Musk has founded a rival AI startup, xAI, which last month merged with X in an all-stock deal valuing xAI at $80 billion.

OpenAI, for its part, announced a $40 billion funding round led by SoftBank, pushing its valuation to $300 billion. That’s nearly four times the valuation tied to Musk’s xAI startup.

“We’re getting ready to build the best-equipped nonprofit the world has ever seen,” OpenAI said in its countersuit. “The idea that we abandoned the mission is false. Elon’s own emails make that clear.”

Edited by Sebastian Sinclair

Crypto industry advisers were keen to push ahead with legislation at a meeting with lawmakers Wednesday but shied away from one topic: President Donald Trump’s meme coin launch and digital asset ventures. 

All agreed that regulating the fast-moving space was necessary but when pressed at a U.S. House Financial Services Committee on Trump’s potential conflicts of interest, speakers were quick to skirt the issue. 

The hearing aimed to clarify regulatory and other issues related to the burgeoning digital assets industry. But questioning from Democratic and more pro-crypto Republicans reflected the differing attitudes toward crypto between the two major U.S. parties. Democrats took particular issue with Trump’s personal crypto initiatives, which have raised concerns about his using his position to advance his business goals. 

Ahead of his inauguration, President Trump launched a meme token—Official Trump—which shot up in value before crashing hard. 

“As Americans wonder how they will afford retirement or afford groceries, Trump is sitting pretty,” Maxine Waters (D-Calif.) said at Wednesday’s meeting. 

“We need to stop Trump before he takes any steps further on crypto legislation,” she continued, claiming President Trump had doubled his wealth via various crypto ventures over the past year. 

Alexandra Thornton, senior director of financial regulation at the Center for American Progress, said she could not comment on the President’s business ventures but added that fraud still existed in the space. 

Rep. Stephen Lynch (D-Mass.) asked Rodrigo Seira, special counsel at Cooley LLP, if there was a problem with President Trump’s meme token launch and the asset’s subsequent price crash. 

Seira refused to comment on any specific project. 

Lynch added: “It is also notable that under the Trump administration, the SEC has dropped almost every lawsuit against some of the worst offenders in the crypto industry.”

Trump’s  Solana-based token, TRUMP, is now nearly 89% down from its January high. 

Some members of the Democratic Party have argued that President Trump is too involved in the crypto space and is unfairly making money. 

Lawmakers are currently deciding how best to move forward with regulating stablecoins: digital tokens pegged to the U.S. dollar and other non-volatile assets. 

Trump campaigned as a pro-crypto Republican to help the digital asset space, and received funding from crypto entrepreneurs and Silicon Valley bigwigs. 

The president has backed a DeFi project, and the Trump family has launched a stablecoin, the World Liberty Financial USD1 token. 

Since Trump took office, regulators have taken a different approach to the Securities and Exchange Commission’s prior tactics of hitting major crypto companies with lawsuits. 

Financial watchdogs have scrapped cases against Kraken, Coinbase, Robinhood, and others.

The SEC has also launched a new task force under commissioner Hester Peirce, and rescinded its Staff Accounting Bulletin (SAB) No. 121, which required companies to record a liability and a corresponding asset for crypto assets held on behalf of users. 

Critics, including Peirce, argued that the guidance added unnecessary complexity and created an uneven playing field for crypto platforms.

In February, the regulator said that meme coins and tokens did not fall within its jurisdiction. 

Edited by James Rubin