Crypto Tips Dominate Whistleblowing Activity This Year, Says CFTC Commissioner

The Commodity Futures Trading Commission (CFTC) has paid out a total of $16 million to individuals who offered information leading to successful enforcement actions this year alone, with most of the tips provided by whistleblowers centered around cryptocurrencies.

CFTC Commissioner Christy Goldsmith Romero revealed the numbers in an October 31 statement, saying that whistleblowers—who are eligible to receive up to 30% of the monetary sanctions collected—play “a vital role” in supporting the regulator’s investigations.

According to the Commissioner, so far this year, the CFTC has received 1,530 tips, adding that it's ”the highest of any year.”

“The majority of the tips received this year involved crypto—an area that continues to have pervasive fraud and other illegality,” said Romero.

Two whistleblowers, in particular, received a combined total of $15 million for their information, which played a pivotal role in the success of enforcement cases in September.

Although the specifics of these cases are not revealed, Romero stressed that the two whistleblowers provided “significant information and assistance” that helped the CFTC to bring separate successful enforcement cases.”

Since launching the first CFTC’s Whistleblower Program award in 2014, the regulatory body has awarded nearly $350 million to informants who have exposed fraudulent activities. These awards have been linked to more than $3 billion in enforcement sanctions issued in connection with the disclosed information.

“The CFTC could not fully protect customers and markets without whistleblowers,” said Romero. “Whistleblowers help identify fraud and other illegality, interpret key evidence, and save considerable Commission resources and time.”

Decrypt has reached out to the CFTC for additional comments on the matter and will update this article should we hear back.

CFTC and crypto

In June this year, the CFTC came forward with a proposal to revise its rules pertaining to risk management so that it could also take into account risks related to "evolving technologies" like cryptocurrencies and artificial intelligence (AI).

Romero added that "unregulated spot markets carry additional risks, as seen with the collapse of FTX, Terra Luna, Celsius, and numerous others that have resulted in substantial losses."

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Prior to that, in April, the CFTC secured a penalty payment of $3.4 billion in a Bitcoin-related fraud case linked to Cornelius Johannes Steynberg, the CEO of Mirror Trading International Proprietary Limited (MTI).

In this settlement, half of the total amount was allocated to provide restitution to victims, with the remaining half designated as a civil penalty, marking it the highest civil monetary penalty ever imposed in any CFTC case.

In June, the regulator announced a court judgment for a permanent injunction against former New York Stock Exchange (NYSE) broker Michael Ackerman, who ran a bogus crypto trading algorithm and was previously charged for defrauding investors.

CFTC Cracks its 'Largest Fraud' Case Involving Bitcoin, Orders Offender to Pay $3.4B Penalty

A whopping $3.4 billion—that’s how much a Texas court has ordered Cornelius Johannes Steynberg, the CEO of Mirror Trading International Proprietary Limited (MTI) to pay in connection with a large-scale fraud case involving Bitcoin. As part of the settlement, half of that amount will go toward providing restitution to victims of MTI’s fraudulent activities, with the other half designated as a civil penalty, the highest civil monetary penalty ordered in any CFTC case. The U.S. Commodity Futures Tr...

Ackerman was ordered to pay over $50 million in restitution and civil monetary penalty in connection with a fraudulent digital asset trading scheme.

The CFTC settled another crypto-related fraud in July, when the two Florida men accused of running a multi-million dollar Bitcoin scheme were ordered to pay approximately $5.4 million in restitution.

Edited by Liam Kelly.