In an era where digital financial transactions dominate, peer-to-peer (P2P) platforms like Cash App have provided convenience, speed, and anonymity for users transferring money. However, with recent regulatory crackdowns and enhanced security protocols, many individuals operating in the shadows of the digital economy — drug dealers, sex workers, and illegal gamblers — are finding their once-reliable money pipeline under increased scrutiny.
The crackdown on illicit transactions
Cash App, once considered a go-to financial tool for individuals engaged in under-the-table dealings, is now actively returning payments and citing “for your protection” as the reason. This sudden shift is not a random precaution; it’s part of a larger effort to prevent financial crimes, comply with new government regulations, and avoid hefty penalties.
In January 2025, Block, Inc., the parent company of Cash App, was fined $80 million by U.S. state regulators for lax anti-money-laundering (AML) compliance. The platform was accused of failing to properly monitor suspicious transactions, allowing bad actors to use the app for illicit activities such as:
- Drug sales: Digital cash transfers for narcotics to avoid law enforcement tracking.
- Prostitution and escort services: Payments disguised as generic transactions to avoid detection.
- Illegal gambling: Unregulated online betting and backdoor transactions outside of official gambling platforms.
With this regulatory pressure, Cash App has ramped up its security measures, returning or freezing payments that raise red flags.
How this affects underground businesses
For those who relied on the platform to conduct “business,” the new restrictions present a significant challenge.
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Drug dealers struggling to move money: Cryptocurrencies and P2P payment apps have long been favored by dealers to sidestep banks, but with heightened scrutiny, many are being forced to find alternative payment methods. Transactions are more frequently flagged, and accounts associated with repeated high-risk activity are being permanently banned.
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Sex workers losing a discreet payment option: Sex workers, particularly independent escorts and content creators outside of mainstream platforms, have used apps like Cash App for direct payments. Now, with an increase in automated payment reversals, many are turning to alternative solutions like cryptocurrency or private payment processors that have less stringent policies.
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Gambling circles seeking new avenues: Illegal betting operations and underground gambling rings frequently used Cash App to transfer winnings under vague descriptions. Now, with new compliance requirements and stricter monitoring, these payments are more likely to be flagged or held. Many bettors are looking toward other apps that have yet to implement such aggressive security measures.
What’s next?
The financial crackdown is not unique to Cash App. Other P2P platforms such as Venmo, Zelle, and PayPal are also implementing similar anti-fraud measures in response to regulatory pressures. With the U.S. government tightening financial oversight, users engaging in questionable activities are left scrambling for alternatives.
Some have migrated to cryptocurrencies like Bitcoin, which remain decentralized and harder to regulate. Others are moving to less mainstream financial apps that still allow direct transfers without heavy monitoring. However, these workarounds may not last forever, as regulators continue closing loopholes in the financial system.
For those operating in legal businesses but caught in the crossfire of these security updates, the best course of action is to ensure compliance with financial regulations, keep thorough records of transactions, and explore alternative payment platforms that align with their needs.
Cash App’s recent crackdown signals a broader shift in the digital finance world one where transparency is becoming non-negotiable, and the underground economy is finding it harder to move money in the shadows.
