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Crypto Whistleblowers Provide Largest Amount of Tipoffs to CFTC 

Published November 1, 2023 11:23 AM
James Morales
Published November 1, 2023 11:23 AM

Key Takeaways

  • Whistleblowers notified the CFTC about potential crimes 1,530 times this year.
  • In 2023, 7 awards worth a combined $16M were granted to whistleblowers.
  • They provided information that led to successful enforcement actions.
  • The majority of the tipoffs received this year involved crypto.

Since it started the initiative in 2014, the Commodity Futures Trading Commission (CFTC) has handed out awards worth nearly $350M as part of its whistleblower program. 

According to the program’s 2023 annual report , the agency received 1,530 tipoffs in the 12 months to September 30, more than in any previous year. Significantly, the majority of the tips received in 2023 involved crypto, reflecting the CFTC’s growing concern with fraud in the space.

Crypto Scams Keep The CFTC Busy

Alongside those relating to market manipulation, insider trading, corruption, and other regulatory infringements, in 2023, the CFTC’s whistleblower office received tips and complaints concerning fraudulent or manipulative digital asset activity.

According to the agency’s latest report, whistleblower tips “involved allegations of fraudulent solicitation and subsequent misappropriation of crypto/digital assets.” These included pump-and-dump schemes, fraudulent representations of moneymaking opportunities and refusals to honor withdrawal requests. 

CFTC whistleblower tipoffs
2023 was the most active year yet for the CFTC’s whistleblower program.

“The majority of the tips received this year involved crypto—an area that continues to have pervasive fraud and other illegality,” Commissioner Christy Goldsmith Romero said in a statement  on Tuesday, October 31.

“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,” she added.

Policing Digital Asset Platforms

Although the CFTC does not disclose which cases involve information provided by whistleblowers, their role will likely become more important as the agency increases its scrutiny of crypto platforms, which emerged as a key enforcement area in 2023.

In October, for example, the agency filed a lawsuit  against the bankrupt crypto lender Voyager Digital and its CEO Stephen Ehrlich. The suit alleges that Voyager and Ehrlich engaged in a scheme to defraud customers by misrepresenting the platform’s safety and Voyager’s financial health.

Alongside complaints against Voyager, Binance and other centralized entities, the CFTC has also started to crack down on the DeFi space, which Enforcement Director Ian McGinley called “the latest frontier” of regulatory enforcement.

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