Man checking his cryptocurrency earnings on his phone.

Cryptocurrency Fraud and the SEC Whistleblower Program

Cryptocurrency is a digital medium of exchange that has exploded in popularity in recent years. For example, Bitcoin, which is probably the most well-known type of cryptocurrency, peaked at a price of $20,000 per coin in 2017. And although the price of bitcoin has since dropped, cryptocurrency remains a popular choice for investors seeking big gains in a short amount of time. Unfortunately, however, due to its popularity and relative lack of regulation when compared to other types of investments, this world is rife with scammers. Below is an overview of cryptocurrency fraud and how to report it under the SEC Whistleblower Program. 

Types of Cryptocurrency Fraud

Although cryptocurrency is a relatively new phenomenon, scammers have already devised several ways to illegally profit from its popularity. Common types of fraud include: 

  • Initial Coin Offerings – An initial coin offering is like an initial public offering, giving investors an opportunity to get in on the ground floor of an investment at a low price. However, many initial coin offerings are scams, offering investors cryptocurrency that they never receive. In fact, a recent study revealed that nearly 80 percent of the initial coin offerings conducted in 2017 were scams.
  • Pump and Dump Fraud – “Pump and dump” fraud is a classic scheme in which owners of a company’s stock try to artificially inflate its price before selling it off. This scheme works the same way in the world of cryptocurrency, enabling scammers to illegally earn massive profits.
  • Market Manipulation – Cryptocurrency scammers also use illegal market manipulation tactics to increase their profits, such as front-running, churning, and spoofing, which are classic methods of financial fraud.

Reporting Fraud

Although the above tactics are just a few of the many ways in which scammers take advantage of investor demand for cryptocurrency, virtually any dishonest method used to market cryptocurrency is reportable under the SEC Whistleblower Program. Under this program, a  whistleblower is eligible for a financial reward for disclosing such information to the SEC. Specifically, under the SEC Whistleblower Program, the SEC will issue a whistleblower reward to anyone who provides original information about wrongdoing that leads to monetary sanctions in excess of $1 million. In exchange for providing this information, a whistleblower may be entitled to up to 30% of this amount.

Do You Have Information About Cryptocurrency Fraud?

If you have information that an entity or individual has committed cryptocurrency fraud, you may be entitled to financial compensation. However, in order to make sure that you report this information correctly and give yourself the best chance possible at financial compensation, you need an SEC whistleblower attorney on your side. 

Jeff and his firm are presently handling major cryptocurrency fraud whistleblower claims in this country and in Canada, before the Securities and Exchange Commission here and similar agencies in other nations. At Newman & Shapiro, we’ll provide you with first-rate representation and dependable service in your SEC whistleblower case. Please contact us today to learn more about your rights under the SEC whistleblower program.