CFTC Awards- Whistleblowers Stand to Receive Potentially “Very Big” Payouts
The world of whistleblowers just became even more fascinating as the CFTC is urging insiders to come forward and blow the whistle for potentially some very large CFTC whistleblower awards. The sudden collapse of FTX, the third-largest cryptocurrency exchange and the platform of choice for celebrities like Tom Brady, has placed the spotlight on the need for stronger regulations and enforcement in the cryptocurrency market. The FTX bankruptcy joins a trilogy of crypto failures in which tens of billions were lost in the Celsius bankruptcy and the Luna unpegging. Particularly egregious with FTX, was the self-proclamation of the head of it regarding the safety and stability of the exchange and his comments to Congress which could lead to perjury charges saying he invited regulation, when secretly he indicated he was trying to thwart it.
Courts and regulators are increasingly considering cryptocurrencies and other digital currencies to be securities and/or commodities, which would bring them under the jurisdiction of the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), the two federal agencies that protect investors from securities and commodities fraud. Such fraud can include accounting fraud, making false representations to investors, and manipulation of the commodities and futures market.
How much is a CFTC whistleblower award?
To assist the Government in rooting out such fraud, both the SEC and CFTC have robust whistleblower programs that pay whistleblower awards of up to 30% of any monetary sanctions or penalties resulting from information submitted by a whistleblower. Additionally, whistleblowers can file claims anonymously and potentially remain anonymous throughout the entire process through the use of a skilled and experienced whistleblower law firm, so it is strongly encouraged that if an individual has inside information to consult with an SEC whistleblower law firm or a CFTC whistleblower law firm, not just a general practitioner.
The CFTC has signaled an increasing reliance on whistleblowers to protect investors in the crypto/digital currency market. In March 2022, the CFTC’s Chairman Rostin Behnam called the CFTC Whistleblower Program “an increasingly important tool” in rapidly-developing markets with regulatory gaps such as crypto. More recently, CFTC Commissioner Kristin Johnson stated, “In the context of the digital-asset space, the value of having those vocal whistleblowers and tipsters is critical.” She added that awards for those who step forward to report fraud can be “very big.” For example, just last year, the CFTC awarded nearly $200 million to a single whistleblower, the largest CFTC whistleblower award in the agency’s history.
As “cryptofraud” becomes an enforcement priority for the CFTC and SEC, there will be a growing need for insiders with information to prevent widespread investor harm. Thankfully, whistleblowers are already stepping up in greater numbers. In 2022, the CFTC reported that the number of whistleblower tips increased by 50% from the prior year, and further, a majority of those tips were related to “fraudulent misappropriation and fraudulent solicitation involving crypto/digital assets.”
Contact us about your case
If you have insider information about fraudulent activity in the cryptocurrency market, you could be entitled to an award in the millions of dollars for coming forward. To see if your case may be eligible for either the SEC or CFTC Whistleblower Programs, you should consult the experienced whistleblower lawyers at Brown, LLC.