Whistleblowers Can Protect Crypto And DeFi

Jan 30, 2022

Whistleblowers Can Protect Crypto And DeFi

Unregulated cryptocurrency is a thing of the past. As a result of widespread cryptocurrency fraud and the phenomenal expansion of regulation-skirting decentralized finance (DeFi), US authorities are poised to take unprecedented action against the cryptocurrency sector.

This regulatory movement is consistent with the United States' historical pattern of financial regulation — swinging between more and less regulation depending on whether the desire for greater freedom outweighs the fear of financial instability or vice versa.

While free-market crypto supporters may worry, those prepared to collaborate may reap huge rewards. By speaking out against unlawful activities and abuses they see, insiders may safeguard their firms' success while authorities pursue other bad actors.

If the insider's employer refuses to change and regulators are compelled to intervene, the insider may also be able to receive a substantial reward for blowing the whistle. The insider may potentially get protection from retribution by blowing the whistle.

History tends to repeat itself

Financial regulation in the United States follows a well-known pattern — a time of relatively lax regulation followed by a period of increased regulation to address financial instability.

Forefathers of the US fought tooth and nail against the need for government control of the financial system, a battle that focused on the chartering of a national bank. Andrew Jackson eventually dismantled the national bank in favor of a decentralized banking system, ushering in what has come to be known as the Free Banking Era, "wildcat" banks, and decades of financial instability, culminating in Abraham Lincoln's crypto hoax.

More recently, beginning about 1980, a wave of deregulation resulted in financial innovation and consolidation, but also in economic instability in the shape of the late 1980s and early 1990s Savings and Loan Crisis. After the Great Recession of 2007–2008, the pendulum swung back in favor of more regulation with the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

By raising the alarm early, cryptocurrency whistleblowers may help level the playing field in their business.

A similar regulatory tendency is seen in the Bitcoin sector, which was formerly unregulated. Concerned about persistent anti-money laundering and "know your customer" (AML/KYC) failings that have tarnished the cryptocurrency industry's image as a sanctuary for drug traffickers, tax evaders, and terrorist financiers, lawmakers revised the Bank Secrecy Act to include cryptocurrencies expressly.

Chairman of the Securities and Exchange Commission Gary Gensler has likened the crypto revolution to a new age of wildcat banking. The SEC has already asserted that many cryptocurrencies and cryptocurrency-related items are securities, most notably in its action against Ripple. Former Commodity Futures Trading Commission Commissioner Dan Berkowitz – now the SEC's general counsel – believes DeFi is entirely illegal. The Department of Treasury has recommended that Congress prohibit non-bank issuers from issuing stablecoins, a type of cryptocurrency backed by a reserve asset to provide price stability.

Even governments are getting involved, with state attorneys general pursuing lawsuits against businesses such as NEXO, Celsius, and BlockFi for failing to register in their respective jurisdictions before issuing or selling securities or commodities. Cryptocurrency's period of regulatory exemption has come to an end.

Whistleblowers may help shape regulatory and compliance policies

While the business is concerned about this counterrevolution, crypto insiders who disclose fraud and illicit activities to the authorities stand to benefit significantly. Regulators such as the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Financial Crimes Enforcement Network, and the Internal Revenue Service rely on whistleblowers to provide an inside look at a company's or industry segment's operations, assisting regulators in identifying fraud and illegal activity well before wrongdoers irreparably harm investors, customers, and the public.

Insider information may also assist regulators in focusing their enforcement actions and legislation on the space's worst offenders, preventing policymakers from needlessly stifling unique and important components of the bitcoin economy.

Whistleblowers may receive compensation for providing this information via various federal whistleblower motivation initiatives, provided the whistleblower correctly submitted a tip that resulted in a qualified enforcement action.

In the SEC and CFTC whistleblower programs and the recently strengthened AML whistleblower program, a whistleblower may get up to 30% of the proceeds of an enforcement action exceeding $1 million. These procedures enable whistleblowers to conceal their identities by submitting tips anonymously through an attorney.

A whistleblower may get up to 30% of a government recovery of at least $2 million under the IRS whistleblower program. Since 2007, whistleblowers have won over $1 billion via the SEC and CFTC whistleblower programs, including eye-popping awards of more than $100 million. The IRS whistleblower program alone has paid more than $1 billion to whistleblowers.

However, whistleblowers do not only benefit the government. Whistleblowers may assist businesses in avoiding regulatory enforcement proceedings by forecasting regulatory trends and enforcement measures in the future. Numerous personnel are well-positioned to raise the alarm and alert decision-makers to the need for change. A whistleblower can avert potential problems by advising the company to seek No Action Letters from regulators – effectively asking a regulator to approve a particular product or course of action – or by suggesting reorganizing a transaction or product in such a way that it is less likely to violate regulations.

Even when a firm has already participated in possibly criminal activities, a whistleblower may have the finest insight into how to reverse course or contact authorities about rectifying the company's actions.

Protections for whistleblowers

Being a whistleblower may be frightening, considering the high rate of reprisal. Retaliation may take various forms, from a hostile work environment to dismissal.

Federal and state legislation, such as the Sarbanes-Oxley Act, the Dodd-Frank Act, and the Anti-Money Laundering Act of 2020, may protect against retribution for whistleblowers. While the remedies available under the different whistleblower acts vary, they all aim to place the retaliated-against employee in the same position he or she would have been in if retaliation had not happened.

To qualify for these safeguards, an employee must blow the whistle in a protected manner. A whistleblower does not need to establish an actual law violation or even be right that fraud or criminal behavior occurred. Rather than that, these laws usually shield whistleblowers against retaliation that can demonstrate "that a reasonable person in the same factual circumstances with the same knowledge and experience have believed that the employer violated" the law.

As several significant corporate whistleblower jury convictions over the previous decade illustrate, a retaliating company might face substantial financial penalties. However, since whistleblower retaliation laws are complicated, an employee considering blowing the whistle should get legal counsel.

Whistleblowers to the rescue

The cryptocurrency sector has a lot to learn. Traditional financial institutions have spent decades adapting and adhering to regulatory requirements, while crypto has operated with little concern for compliance.

By raising the alarm early, cryptocurrency whistleblowers may help level the playing field in their market. By taking whistleblower concerns seriously, firms in the cryptocurrency sector may avoid the expected bombardment of enforcement proceedings and spare themselves time, money, and headache.

Subscribe Our Newsletter

Kashkari Says Fed Shouldn’t Overreact to Temporary Inflation
Kashkari Says Fed Shouldn’t Overreact to ‘Temporary’ Inflation

President of the Federal Reserve Bank of Minneapolis, Neel Kashkari, stated that the Federal Reserve should not overreact to inflationary pressures that are likely to be transient.

Banks and Finance
eToro Lawsuit Settles

Hazem

eToro Lawsuit Settles at $1.5 Million Payment and Ceasing Crypto Operations in The US

The SEC and eToro reached a settlement after the exchange agreed to pay $1.5m and limit its crypto offerings to US investors. How will this affect eToro?

Crypto
Get the ultimate solution: B2BinPay Get the ultimate solution: B2BinPay
Sponsored
Anna

Tips On Finding Crypto Liquidity Providers In 2023
Picking out a reliable crypto liquidity provider can drive your crypto business forward though it might seem challenging.

discover
What is a Token Maker? – Creating Your Own Crypto Token Without Coding Skills

Alexander

What is a Token Maker? – Creating Your Own Crypto Token Without Coding Skills

In the world of blockchain technology, tokens serve as a means of representing various assets and features. Today, there are over 22,900 cryptocurrencies in existence (though many of them are inactive or not valuable), and more tokens are created every day as more and more crypto projects are introduced.

Investing
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiries

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap

    Vitaliy

    Triangle Patterns in Trading: Mastering Ascending, Descending & Symmetrical Strategies for Maximum Profit

    Triangle Patterns in Trading: Ascending, Descending & Symmetrical Guide

    Alexander

    What Is COTI? Payments, Token & Price Prediction

    What is a COTI coin

    Constantine

    Best Copy Trading Software in 2025

    Best Copy Trading Software in 2025

    Alex

    What Is an AI Agent? The Future of Finance Explained

    AI Agent Explained

    Constantine

    How to Start a Liquidity Provider Business?

    How to Start a Liquidity Provider Business

    Constantine

    How to Start a White Label Brokerage?

    How to start a white label brokerage

    Constantine

    How to Start a Multi-Asset Brokerage?

    How to Start a Multi-Asset Brokerage

    Hazem

    Crypto Ransomware – How They Happen and How to Avoid Them

    Crypto ransomware explained

    Constantine

    Best Web3 Browsers in 2025

    Best Web3 Browsers

    Constantine

    Best DAO Projects in 2025

    Best DAO projects in 2025

    Alexander

    Crypto Nodes That Pay: Your 2025 Guide to Top Passive Income Opportunities in Crypto

    crypto nodes that pay

    Alex

    Pi Network: Scam or Groundbreaking Crypto? The Full Analysis

    Pi Network Explained

    Constantine

    Triple Net Lease: Meaning, Benefits, and Strategies Explained

    Triple Net Lease

    Constantine

    Hanging Man Pattern: How to Identify and Trade It Effectively

    Hanging Man Pattern

    Alex

    5 Infinite Banking Mistakes That Could Cost You Thousands

    Infinite Banking Mistakes to Avoid

    Aleksander

    Solana Firedancer: Solving Solana’s Biggest Problems with a New Engine

    Solana Firedancer explained

    Alexander

    What Is an Interest Coverage Ratio? How to Use This Financial Metric to Evaluate Company Health

    Interest Coverage Ratio Explained

    Hazem

    After-Hours Trading: Can You Trade After Financial Markets Close?

    After-Hours Trading Explained

    Alexander

    How to Scale a Crypto Exchange Business and Stay Competitive

    how to scale crypto exchange business

    Constantine

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Crypto CrypticStreet Review: The Future of DeFi and Secure Crypto Trading

    Alexander

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Bitcoin Power Law Explained: How It Shapes BTC’s Long-Term Growth

    Hazem

    Megaphone Pattern​: What Is It? How to Use It In Trading

    Megaphone Pattern​: How to Read & Trade with It

    Constantine

    Top 5 Liquidity Bridge Providers in DeFi

    Top 5 Liquidity Bridge Providers in DeFi
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.