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CFTC Awards Over $1 Million to Whistleblower in Digital Asset Case

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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Last updated:

August 8, 2024

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The Commodity Futures Trading Commission (CFTC) has awarded over $1 million to a whistleblower who provided crucial information in a digital asset case.

According to an official announcement published by the CFTC, the whistleblower’s information led to an enforcement action in the digital asset markets and played a significant role by identifying unlawful conduct.

CFTC’s Whistleblower Program

The Commission stated that whistleblowers can receive between 10 and 30 percent of the monetary sanctions collected, with all awards funded by the CFTC’s Customer Protection Fund.

Importantly, no money is taken or withheld from injured customers to finance the program, ensuring that the funds come solely from penalties paid by offenders.

“Identifying unlawful conduct in the digital asset marketplace is a major priority for the CFTC, especially as everyday Americans are increasingly victimized by digital asset scams,” said CFTC Director of Enforcement Ian McGinley.

“During the last fiscal year, digital asset cases accounted for almost 50% of the CFTC’s docket, and the majority of whistleblower tips that year were related to digital assets,” said McGinley.

Established under Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Whistleblower Program has been active since 2014, granting awards totaling around $380 million.

“Whistleblowers have increasingly played a significant role in the CFTC’s enforcement actions in the digital assets space,” said Whistleblower Office Director Brian Young.

FTX Allegedly Paid Whistleblowers Over $25 Million

FTX Group, led by Sam Bankman-Fried (SBF), allegedly disbursed over $25 million in hush money to seven whistleblowers before the crypto exchange’s downfall in November 2022.

Robert Cleary, the independent examiner responsible for the report, uncovered that FTX settled claims related to employee severance packages, noting that the company failed to document employee complaints.

The investigation identified settlement agreements totaling over $25 million with seven whistleblowers who alleged various improprieties. The majority of these funds were paid to five whistleblowers who raised concerns about systemic issues within the company.