CFTC Whistleblower Office Posts Notices of Covered Actions for Crypto Cases

Crypto Whistleblower

Between August 12 and 17, the U.S. Commodity Futures Trading Commission (CFTC) posted three Notices of Covered Actions (NCAs). Each NCA refers to a recent enforcement action by the CFTC. One newly posted NCA covers a case in which the CFTC penalized a company $100 million for illegally operating a cryptocurrency platform. The NCAs signal that individuals may now submit whistleblower award claims in connection to the cases.

Through the CFTC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information which leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government in the action.

The first NCA, posted on August 12, covers a case where the CFTC penalized five companies which operated the BitMEX cryptocurrency derivatives trading platform. The BitMEX entities are to pay the CFTC nearly $100 million for operating a facility to trade or process swaps without having properly registered in the United States to do so.

The second NCA, posted on August 12, covers a case in which the CFTC recovered nearly $1.5 million from individuals who conducted a digital assets scheme. The CFTC charged three individuals who operated the business Global Trading Club (GTC) with fraud. According to the CFTC, from 2016 to 2017 the individuals falsely represented GTC to potential and actual customers by claiming the company “employed ‘master traders’ who had years of experience trading ‘crypto currency,’ and used ‘cutting edge trading robots’ to trade Bitcoin for customers ‘24 hours a day, 7 days a week.’”

The third NCA, posted on August 17, covers a case in which the CFTC ordered Tyson Foods to pay $1.5 million for position limit, reporting, and recordkeeping violations. The CFTC charged Tyson with “exceeding the CFTC’s position limits for soybean meal futures contracts traded on the Chicago Board of Trade (CBOT) and for failing to comply with reporting and recordkeeping obligations regarding its cash positions in grains.”

By posting an NCA, the CFTC is not making any determination that the relevant case was aided by a whistleblower tip. Rather, the CFTC posts an NCA for any enforcement action that results in monetary sanctions exceeding $1 million. Individuals have 90 days after an NCA is posted to apply for a whistleblower award by submitting a Form WB-APP.

Established in 2010 with the passage of the Dodd-Frank Act, the CFTC Whistleblower Program has grown significantly over the past decade and developed into an important tool in the CFTC’s enforcement efforts. Whistleblower disclosures have allowed the CFTC to recover more than $1 billion in sanctions and the agency has correspondingly awarded $123 million to whistleblowers.

On July 6, President Biden signed the CFTC Fund Management Act into law. The Act is an emergency piece of legislation which saved the CFTC Whistleblower Program from financial collapse. The program’s recent success had depleted its funds to a dire level, which jeopardized its existence. The Act set up a separate account to finance the Office of the Whistleblower, ensuring that the program can continue to operate even during funding crises.


The CFTC’s Notices Of Covered Actions

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