Report: Cryptocurrencies Make Up A Sizeable Portion Of Whistleblowing Activity In The US

The Commodity Futures Trading Commission (CFTC) has splurged over $16 million in whistleblower payouts in 2023 alone, with a large chunk of the funds directed to tips in the virtual currency industry.

CFTC Commissioner Christy Goldsmith Romero disclosed in a statement at the annual report on the Commission’s Whistleblower Program that the policy has played a key role in cracking down on financial fraud. According to Romero, the CFTC has raked in over $3 billion from the successful prosecution of cases as a result of whistleblowers, awarding $350 million since the launch of the initiative.

However, in recent years, Romero says a sizable portion of tips originate from the virtual currency industry as the CFTC continues to monitor the region. In 2023 alone, the CFTC received 1,530 tips, making it “the highest of any year”, with over 900 stemming from virtual currencies.

“The majority of the tips received this year involved crypto – an area that continues to have pervasive fraud and other illegality,” said Romero. “With the rise of crypto, more retail customers have come under the CFTC’s jurisdiction, making even more critical the efforts of the CFTC’s Whistleblower Program and the Office of Customer Education and Outreach.”

According to the CFTC’s guidelines, whistleblowers exposing fraud in crypto circles receive between 10 to 30 percent of monetary sanctions gleaned from their tips. Romero revealed that two whistleblowers netted over $15 million for providing information that led to successful enforcement cases but did not reveal further details.

Apart from financial incentives, the CFTC says it will increase the “confidential protection” available to whistleblowers, pledging further reforms for the policy.

“Given the great benefit that whistleblowers provide to the CFTC’s enforcement efforts, it is critical for the CFTC to provide both incentives for whistleblowers to come forward and protections for working with a federal whistleblower program,” said Romero. 

Alongside a thriving Whistleblower Program, the CFTC’s Office of Customer Education and Outreach has recorded significant gains in its attempts at raising public awareness towards crypto scams.

Tighter supervision for crypto

The CFTC has upped the ante for monitoring the virtual currency sector, racking up a string of settlements along the way. In April, the CFTC netted a $3.4 billion settlement from the founder of Mirror Trading International Proprietary Limited (MTI) over a Bitcoin (BTC) fraud.

The Commission had previously scored high-profile victories against Tether and Bitfinex for “making untrue or misleading statements” with both entities paying fines worth $42.5 million.

“This case highlights the expectation of honesty and transparency in the rapidly growing and developing digital assets marketplace. The CFTC will continue to take decisive action to bring to light misleading statements that impact CFTC jurisdictional markets,” said the CFTC.