The sudden collapse of the cryptocurrency exchange FTX has heightened concerns over the lack of regulations for the cryptocurrency market. Commentators quickly compared FTX’s collapse to the Enron scandal and the 2008 collapse of Lehman Brothers. These events triggered major Wall Street reform. U.S. authorities are actively investigating FTX for fraud. One thing is clear: in the wake of FTX’s collapse, U.S. regulatory bodies must fully utilize whistleblower programs in regulating the cryptocurrency industry.
The comparison between FTX and Enron is notable because of the critical role a whistleblower, Sherron Watkins, played in exposing Enron’s accounting fraud. Insiders with direct knowledge of fraud are vital in exposing financial misconduct, holding fraudsters accountable, and protecting investors.
Luckily, strong whistleblower provisions already exist for individuals blowing the whistle on cryptocurrency fraud. Following the 2008 financial collapse, Congress passed the Dodd-Frank Act establishing whistleblower award programs at both the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), two agencies with jurisdiction over cryptocurrency fraud.
The SEC or CFTC may consider cryptocurrency a security or commodity if marketed as an investment by a particular company, such as an Initial Coin Offering (ICO). The SEC and CFTC have jurisdiction over fraudulent and manipulative activities in the virtual currency market. Such activities...
FIRST ON FOX: A Mexican national who voted illegally in U.S. elections and falsely claimed to be a citizen has been convicted and could face removal under federal immigration law. The Department o...