Crypto whistleblowers set for huge rewards from regulators

US regulators are offering to pay huge sums to whistleblowers in the aftermath of the collapse of cryptocurrency exchange FTX. 

A senior official at the Commodity Futures Trading Commission has urged those with information about wrongdoing in the industry to come forward. 

Commissioner Kristin Johnson said at a conference in London that informants would be given anonymity and be paid handsomely. 

‘In the digital-asset space, the value of having those vocal whistleblowers and tipsters is critical,’ she added. ‘When it comes to payments to people who contribute to the CFTC’s ability to identify, investigate and prosecute cases, the numbers are very big.’ US regulators are investigating Sam Bankman-Fried’s crypto empire and whether FTX mishandled customer funds. 

The regulators overseeing the ruins of FTX have laid bare a stunning list of allegations against the company’s former leadership, slamming non-existent governance and the misuse of client funds as they struggle to locate billions of dollars in missing assets. 

John Ray, who was appointed as FTX’s liquidator last week, said the exchange’s financial controls and governance were worse than Enron’s. He told a US bankruptcy court: ‘Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.’ 

Ray oversaw the winding up of the US conglomerate after its collapse in 2001. Enron’s bankruptcy wiped the company’s £51billion valuation. 

US regulators are well-known for paying whistleblowers huge sums to try to prevent Enron-style collapses. Under the CFTC’s rules, whistleblowers can be awarded as much as 30 per cent of the money the agency collects in penalties from a case. 

In October, the CFTC awarded £168m to a former Deutsche Bank employee who raised concerns about the manipulation of the Libor interest rate benchmark.