Cryptocurrency scams often masquerade as legitimate investments, luring victims with impossible promises of high returns and low risk. However, whistleblowers within crypto exchanges or investors who spot red flags can hold these companies accountable and potentially receive significant financial rewards for their actions. 

Crypto tokens and exchanges face regulation from various agencies. The SEC considers cryptocurrencies, coins, and tokens as securities and “digital assets,” purchased through exchanges like Bitcoin or Ethereum. Non-fungible tokens (NFTs) also fall under this category, as established in the Friel v. Dapper Labs, Inc. et al case. The CFTC considers them commodities or currency exchanges. Financial Crimes Enforcement Network defines them as money services businesses. 

Crypto scams often mirror traditional securities fraud, but in a digital landscape. Fraudsters exploit the allure of high returns with minimal risk to attract investors. The recent surge in celebrity endorsements, despite SEC warnings against their validity, has unfortunately made investors more vulnerable to these schemes. 

This overlap in jurisdiction means whistleblowers with information about crypto-fraud have multiple avenues for reporting, empowering them to expose wrongdoing and potentially receive substantial compensation.