I am lawyer who represents whistleblowers. I also am fascinated by the worlds of cryptocurrency and blockchain technology. Increasingly, these two worlds intersect, if not collide. As anyone steeped in the fintech arena knows, blockchain has the potential to revolutionize banking and financial transactions. Unfortunately, cryptomania has resulted in numerous Ponzi-like scams, and other dubious activities such a market manipulation, money laundering, and tax evasion.
Even legitimate cryptocurrencies, like Bitcoin (BTC) and Ethereum (ETH), are frequently used for unlawful ends. Governments around the world, including India and China, have already started to heavily regulate, or even outlaw, the use of cryptocurrency. In the United States, various government agencies have investigated and brought legal actions against many crypto and blockchain projects and their teams.
As has happened in other industries, whistleblowers are the ones most likely to lead the way in cleaning up crypto. The crucial whistleblowers are people inside the business, who understand the technologies that drive it, and who, proverbially speaking, know where the bodies are buried. They are the ones best positioned to explain what is happening in this highly technical sector, and to expose the wrongdoings possibly being undertaken by people who are practicing nefarious activities within the cryptosphere.
Now for the good news. Not only can blowing the whistle be the ethically right thing to do, but also you can earn very substantial monetary rewards. Over the last 35 years, the laws of the United States have undergone what I call the “whistleblower revolution.” Both Congress (spearheaded primarily by Senator Chuck Grassley, a staunch advocate for whistleblowers) and the Executive Branch have come to recognize the incredibly valuable role that whistleblowers can play in stopping fraud and other illegal activity. And in recognition of that value, they have passed a series of laws that both protect whistleblowers, but also incentivize whistleblowing by offering monetary rewards.
This whistleblower revolution began in 1986, when the False Claims Act—which covers fraud on government programs or by government contractors—was amended to provide a series of new incentives for whistleblowing. But in the years since, these types of whistleblower reward laws have been passed covering a variety of additional areas, including securities fraud, commodities futures fraud, banking fraud, tax fraud and, most recently, money laundering. These are all areas where crypto-related wrongdoing is occurring in the here and now.
These whistleblower reward programs have paid out billions of dollars, and routinely pay multi-million-dollar rewards to individual whistleblowers. This is because, in all of the programs, the amount of the rewards is calculated as a percentage of the money recovered by the government. Whistleblowers who expose big frauds earn big rewards, and the bigger the fraud the bigger the potential reward.
Now let me turn to the details. I will start by explaining what I call the “Big Five” key concepts that apply across all the whistleblower reward programs. These are important concepts to consider in deciding whether you have information that would fall within the whistleblower reward programs, and whether pursuing a reward makes sense.
Then, I will list the four whistleblower reward programs that are most likely implicated by crypto-related wrongdoing, and for each I will give an example of how crypto-related shenanigans that we already know about would have fallen within that particular program if it had been reported by a whistleblower.
The “Big Five” Key Concepts the Apply to All of The Whistleblower Reward Programs
Key Concept #1: Follow the Process
There are many ways to blow the whistle on illegal conduct. You can call the police or the FBI. You can send a letter to a Member of Congress. You can write about it on…