Whistleblowers In The Cryptocurrency Context

On Behalf of | October 13, 2023 | Whistleblower Law

Despite the headlines being generated by the Sam Bankman-Fried trial, cryptocurrency is booming. In 2022, the global market for cryptocurrency was valued at nearly $5 billion and forecasted to rise, according to a recent market report.*

Banks – the heavy lifters in the financial industry – have had a complicated relationship with cryptocurrency. They face numerous risks and regulations. JP Morgan, which has dabbled with crypto in the past, recently announced that it’s developing a new blockchain-based cryptocurrency for cross-border payments.

Despite its quick rise in popularity, cryptocurrency remains a risky business. JP Morgan’s UK branch banned crypto transactions due to scams and fraud, and many financial institutions are steering clear of crypto entirely due to regulatory concerns. With so many people looking to profit off of crypto, there are also many who are willing to resort to fraudulent activities in order to do so. This highlights the growing demand for whistleblowers in this rapidly changing industry.

Potential grounds and avenues for pursuing whistleblower claims

Employees across various industries, including the financial sector, are often in the best position to identify wrongdoing on the part of their employers. This is especially true with regard to cryptocurrency. Multiple federal whistleblower programs may be available to report ethical and regulatory violations – and reap a reward for doing so.

Potential cryptocurrency violations include:

  • Selling unregistered cryptocurrency
  • Manipulating the market
  • Failing to comply with SEC regulations
  • Perpetuating or overlooking fraud
  • Using cryptocurrency to launder money
  • Avoiding tax obligations
  • Insider trading
  • Illegal initial coin offerings
  • Failing to comply with disclosure requirements
  • Money laundering

As an employee or contractor, if you discover evidence of illegal or ethical conduct with regard to cryptocurrency, it’s important to speak with an outside attorney. You may have grounds to pursue a whistleblower claim through legal avenues such as:

  • The SEC Whistleblower Program: The Securities and Exchange Commission offers financial rewards for those who report financial regulatory violations. You can remain anonymous if you have an attorney.
  • The CFTC Whistleblower Program: Similar to the SEC, the Commodity Futures Trading Commission (CFTC) offers rewards and protection for those who report violations of the federal Commodity Exchange Act.
  • The IRS Whistleblower Program: If tax violations are involved, reporting them to the Internal Revenue Service is another option.

Whistleblowers play a big role in identifying and reporting misconduct, which in turn has a ripple effect on the industry as a whole.

It takes courage to step forward as a whistleblower. If you’re considering doing so, make sure you speak with an experienced lawyer about your options.