Cryptocurrency Fraud Whistleblower Attorney

Cryptocurrencies such as Bitcoin and Ethereum have exploded in popularity in the last decade. As with any other medium of exchange, however, cryptocurrencies are subject to fraud and manipulation. When that happens, investors are ripped off and the public loses confidence in the integrity of cryptocurrency. Whistleblowers who know about fraud can be rewarded for stepping forward and exposing scams. But maximizing your reward and protecting your rights under whistleblower laws means having the experience of Newman & Shapiro on your side. If you have information concerning cryptocurrency fraud, we can help.

What Is Cryptocurrency?

Cryptocurrency is like any other currency in that it can be used to purchase goods and services. But two main differences with crypto are that it is digital and it lacks the backing authority of a central bank. Cryptocurrency uses cryptography (codes) to provide secure online transactions. Without a central bank like the Federal Reserve regulating its distribution and value, crypto instead uses a technology called blockchain to manage and record transactions.

Blockchains are essentially electronic recordings of transactions between parties. Each block in the chain records timestamped data that points and links to a previous block. No one can change a block without affecting a previous one, and the data is stored across numerous computers. This technology allows users to verify the authenticity of each transaction and provides a measure of security to cryptocurrency.

Think of cryptocurrency as cash for the internet, without the middlemen of banks and regulators. This peer-to-peer payment network has manifested itself through numerous different currencies such as Bitcoin, Ethereum, Monero, and others.

Crypto is used by many different types of businesses, including brick-and-mortar establishments. The use of cryptocurrencies in this form is not particularly remarkable. The controversy with cryptocurrency is primarily due to its use as an investment vehicle. In 2017, for instance, the value of Bitcoin unexpectedly skyrocketed to nearly $20,000 per share before crashing in 2018. This, among other news, garnered the attention of regulatory agencies. To understand their concerns, you have to know about initial coin offerings or ICOs.

What Is An Initial Coin Offering (ICO)?

Initial coin offerings or ICOs (similar in nature to initial public offerings, or IPOs) are used to raise funds for a new cryptocurrency project. Cryptocurrencies are sold in the form of “tokens” to speculators or investors, in exchange for legal tender or more established cryptocurrencies such as Bitcoin.

But there is a critical difference between an ICO and an IPO. In an IPO, a company must disclose certain information about its finances and legitimacy. The same is not true for ICOs. And while blockchains can offer investors security, it can also be used to defraud them.

ICOs raised approximately $5 billion in 2017 alone. But the SEC has warned that fraudsters can use blockchain technologies “to perpetrate fraudulent investment schemes.” Some of the specific scams used in relation to cryptocurrencies and ICOs include the following:

  • Non-existent tokens or ICOs. Some tokens and ICOs are completely made up. The cryptocurrency might not exist, or the people behind the offering company might have fake biographies. Two fraudulent cryptos, REcoin and Diamond, were exposed and prosecuted by the SEC.
  • Pump and dump. The pump and dump scheme involves stock owners making false statements to create hype that artificially drives up the value of stocks. The very same thing can happen with respect to cryptocurrency ICOs.
  • Ponzi schemes. Another traditional scam that has been adapted to the crypto world is the Ponzi scheme. With the Ponzi scheme, a constant stream of new investors is necessary to pay artificial returns to older investors.

There are numerous other types of cryptocurrency fraud that rely on investors’ lack of knowledge or sophistication with cryptocurrencies. As with investment devices more generally, any company that uses high-pressure tactics or that promises unrealistic, quick, or guaranteed returns should raise red flags.

What To Do If You Suspect A Crypto Scam

ICOs that are potentially fraudulent are subject to investigation by the agency (or agencies) responsible for their oversight. But the government has limited resources, and cryptocurrency scams are constantly popping up. That’s where whistleblowers come in.

If you have original information regarding an ICO or another cryptocurrency scam, you may qualify as a whistleblower. Not only can you help return stolen funds to investors, you may be eligible for a reward of 10-30% of the monetary sanctions imposed.

Why You Need Our Cryptocurrency Fraud Attorney

There is a process to becoming a whistleblower, and your case may take years to come to fruition. Having an experienced attorney is critical to ensuring that you take the necessary steps to qualify as a whistleblower.

The amount of your reward will depend on several factors. For example, you will generally stand to receive a larger reward if the information you provide is timely. In other words, if you know about wrongdoing involving cryptocurrency, waiting to report it could jeopardize your reward. Jeffrey Newman understands the whistleblower laws and what it takes to maximize your reward.

We can also help protect you from retaliation. Being a whistleblower has its rewards, but it can subject you to harassment, punishment, and even termination from employment. Jeffrey Newman works to protect the rights of whistleblowers.

If you have information about cryptocurrency fraud, you need a dedicated and aggressive whistleblower attorney. Turn to Newman & Shapiro. We will schedule a confidential consultation with you to discuss your case and explain your options. Contact us today to get started.