According to a leading whistleblower attorney, the Commodity Futures Trading Commission (CFTC) Whistleblower Program is key to the United States’ efforts to police cryptocurrency, but Congress must pass a bill to save the program from financial collapse.
In a new article for Law360, Stephen M. Kohn of Kohn, Kohn & Colapinto outlines how the CFTC has emerged as a major player in the regulation of cryptocurrency. He highlights the agency’s role in the historic $4.3 billion settlement against Binance and notes that nearly half of the agency’s enforcement actions in 2023 were related to crypto and digital assets.
Furthermore, Kohn reports that crypto whistleblowers “are already flocking to the program.” For the past two years, a majority of whistleblower tips received by the program have related to crypto fraud.
“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,” Kohn writes.
A major issue, however, is that the CFTC Whistleblower Program is facing a financial crisis: the fund used to pay awards and finance the program is facing depletion. “The issue stems from a congressionally set cap on the program’s Consumer Protection Fund,” Kohn writes. “The amount of money that can be placed in the fund, which is entirely financed by sanctions collected thanks to whistleblowers — not by taxpayers — is capped at $100 million.”
Introduced in July by a bipartisan group of senators, the CFTC Whistleblower Fund Improvement Act of 2023 addresses the funding crisis undermining the CFTC Whistleblower Program. “The bipartisan Whistleblower Fund Improvement Act will ensure that the CFTC whistleblower program will not be a victim of its own success and can continue to help root out fraud in the U.S. derivatives markets,” wrote Kohn in a previous article calling for the passage of the bill.
Kohn sees the passage of the CFTC Whistleblower Fund Improvement Act as one of the seven most urgently needed whistleblower reforms. National Whistleblower Center (NWC), where Kohn serves as Chairman of the Board, has issued an Action Alert calling on Congress to pass the bill.
“Funding the CFTC whistleblower program would go a long way toward protecting the American public from crypto fraudsters,” Kohn writes.