CFTC Whistleblower Program Plays a Key Role in Fighting Crypto Fraud

The whistleblower award program of the Commodity Futures Trading Commission (CFTC) is critical in the United States’ efforts to police cryptocurrency fraud. In a new article for Law360, leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto explains how CFTC whistleblowers are crucial for effective crypto regulation.

In recent years, the CFTC has emerged as a leading regulator of crypto fraud, as highlighted by the agency’s role in the historic $4.3 billion Binance settlement. According to the CFTC, nearly half of the enforcement actions it took in 2023 related to crypto fraud. The CFTC Whistleblower Program is central to these efforts: the CFTC reports that about a third of all of its enforcement actions stem from a whistleblower tip.

“Crypto insiders are already flocking to the program; for the second straight fiscal year, a majority of the whistleblower tips received by the program related to crypto- and digital assets,” Kohn writes. “The CFTC whistleblower program, a little-known program for a little-known regulatory agency, is thus primed to be a key tool in the United States’ efforts to police cryptocurrency’s role in the financial markets, an area already proven to be rife with fraud.”

However, Kohn notes that a funding crisis is threatening to undermine the program. He considers the passage of the bipartisan CFTC Whistleblower Fund Improvement Act, which would solve the funding crisis, to be among the seven most urgently needed whistleblower reforms. National Whistleblower Center, where he serves as Chairman of the Board, has issued an Action Alert calling for the urgent passage of the bill.

“Funding the CFTC whistleblower program would go a long way toward protecting the American public from crypto fraudsters,” Kohn writes. “As [CFTC] Commissioner Goldsmith Romero highlighted, crypto is ‘an area that continues to have pervasive fraud and other illegality’ and ‘the CFTC could not fully protect customers and markets without whistleblowers.’”

Read: Why CFTC Whistleblowers Are Crucial To Crypto Regulation