Class Action Lawsuit Filed Against Crypto Firm Block Over Undisclosed 2021 Data Breach

News | April 25, 2024 By:

On Friday, April 12, 2024, a class action lawsuit was filed against Block Inc., formerly known as Square Inc., alleging the cryptocurrency company failed to disclose a major data breach to its shareholders.

The consolidated complaint, filed in the U.S. District Court for the Southern District of New York, claims Block violated securities laws by not revealing a cyberattack that improperly accessed personal information from over 8 million Cash App customers in December 2021. The breach only came to light when Block filed a disclosure with the SEC on April 4th, 2022.

The lawsuit maintains Block was negligent in its cybersecurity practices and aware of privacy risks, as evidenced by repeated warnings of data compromise in its annual 10-K filings with the SEC. It is alleged the company did not have proper security controls, like restricting former employee access, in place to prevent the December 2021 breach.

Led by plaintiffs Fotios Sotiropoulos and Official Intelligence Pty Ltd, the class action seeks damages for Block shareholders who lost money when news of the breach caused the company’s stock price to plunge over 15% on the NYSE. A separate claim also accuses Block executives, including CEO Jack Dorsey, of issuing misleading statements about cybersecurity controls during the acquisition of Afterpay in an Australian stock-for-stock deal.

If certified as a class by the court, the lawsuit could pose a significant financial liability for Block during a period of heightened digital fraud and cyber risk for financial technology firms handling sensitive user information. The complaint maintains strict data protection is critical for companies in the emerging cryptocurrency and blockchain sector.

Please contact BlockTribune for access to a copy of this filing.