Whistleblowers can protect crypto and DeFi – TechCrunch


Unregulated cryptography is history.According to rampant Cryptographic fraud And incredible growth In decentralized finance (DeFi), which circumvents regulation, US regulatory agencies are set to take unprecedented action against the cryptocurrency industry.

This regulatory change tracks US historical patterns for regulating finance. The desire for more freedom oscillates between larger and smaller regulations, depending on whether it is stronger than the fear of financial instability or vice versa.

Free market crypto enthusiasts may be desperate, but for those who are willing to cooperate, it may be of great benefit. If insiders talk about the illegal activity and abuse they have seen, they can ensure that their company succeeds while regulators are targeting other malicious individuals.

If the insider’s company refuses to reform and the regulator is forced to take action, the insider is also eligible to win a large prize for blowing the whistle. By blowing the whistle, insiders also gain protection from retaliation.

History repeats

There is a familiar pattern in US financial regulation. This is a period of relatively low financial regulation followed by tighter regulation to correct financial instability.

From the beginning, our founders have vehemently challenged the need for federal regulation of the financial system, a debate centered around national bank charter.Andrew Jackson finally abolition National banks in favor of the decentralized banking system then led to the free banking era, “Wildcat” banks, and decades of financial instability, leading to Abraham Lincoln’s. Cryptographic fraud

Recently, since around 1980 Wave of deregulation Not only did it lead to financial innovation and integration, but it also created financial instability in the form of slow burning. Savings and loan crisis From the late 1980s to the early 1990s. This deregulation trend led to the Great Recession of 2007-2008, with the Dodd Frankwall Street reform and the enactment of the Consumer Protection Act returning the pendulum to greater regulation.

Cryptographic whistleblowers can help the industry level the competition by issuing early alerts.

This same regulatory pattern is being rolled out in the cryptocurrency industry, which until recently had barely faced regulation.Congressman – Chronic anti-money laundering and crypto industry reputation As a paradise for drug dealers, tax evaders and terrorist financiers – Fix Bank secrecy law Expressly Covers cryptocurrencies.

U.S. Securities and Exchange Commission Chairman Gary Gensler recently launched a crypto revolution A new era of wildcat bankingAnd the SEC takes the position that many cryptocurrencies or products adjacent to cryptocurrencies are securities, most of which are securities. Famous In a proceeding against Ripple. Former Commodity Futures Trading Commission member Dan Berkowitz – now a corporate lawyer for the SEC – I believe DeFi can be completely illegal, Treasury Recommended Congress prohibits non-banks from issuing stablecoins. This is a class of cryptocurrencies backed by reserve assets to provide price stability.

Even the state is involved, and the state attorney general is taking action against companies such as: NEXO, Celsius and Block Fi You did not register with the state before offering or selling the securities or goods. Obviously, the time for cryptocurrencies freed from regulatory oversight is over.

Whistleblowers can guide regulation and compliance

While the industry is outraged by this kind of counterrevolution, crypto insiders who report fraud and misconduct to the government could see a big turnaround. Regulators such as the SEC, CFTC, Financial Crimes Enforcement Network, and Internal Revenue Service need whistleblowers who can look inside the operations of a company or industry segment. This allows regulators to identify fraudulent or illegal activity before the fraudster. It causes irreparable damage to investors, customers and the general public.

Information from insiders also helps regulators target their enforcement and rule-making to address the worst actors in space. This prevents regulators from unnecessarily crushing innovative and valuable aspects of the cryptocurrency industry.

In exchange for this information, whistleblowers can win awards under various federal whistleblower compensation programs if they properly submit tips that contribute to qualified enforcement measures.

in the case of SEC When CFTC The program, and now it’s newly enhanced AML Whistleblower Program, Whistleblowers can receive up to 30% reward for enforcement measures over $ 1 million. These programs also allow whistleblowers to hide their identities by anonymously submitting hints through a lawyer.

for IRS Whistleblower ProgramWhistleblowers can receive at least $ 2 million in 30% of government recovery.Whistleblower $ 1 billion Includes stunning awards through the SEC and CFTC programs Over $ 100 MillionAnd the IRS Whistleblower Program alone $ 1 billion Became a whistleblower since 2007.

But whistleblowers don’t just support the government. Whistleblowers can help businesses break out of the regulatory crosshairs by anticipating regulatory trends and future enforcement measures. Many employees are well-positioned to sound alarms and inform decision makers that changes need to be made. Whistleblowers can avoid potential problems and point out that companies need to require regulators without action letters-effectively congratulate regulators on specific products or policies of conduct. Requests-or suggests restructuring the transaction or product in such a way that it may be related to regulation.

Whistleblowers, even those who are already engaged in potentially illegal activities, have the best understanding of how to modify policies to correct the company’s behavior and how to approach regulatory agencies. It may be.

Protection of whistleblowers

Being a whistleblower can be a terrifying outlook given the prevalence of retaliation. Retaliation can take many forms, from hostile work environments to retirement.

Federal and state law, including Listed Corporate Accounting Reform and Investor Protection Act, Dodd-Frank method When 2020 Money Laundering Prevention Act, Can protect whistleblowers from retaliation. The statutory remedies for different whistleblowers vary, but are designed to put the retaliated employee in the same position as if no retaliation had taken place.

However, to receive these protections, employees must whistle in a protected manner. Whistleblowers do not need to prove actual violations of the law, nor do they need to prove exactly that fraud or misconduct has occurred. Rather, to encourage employees to express their concerns, these laws generally protect whistleblowers from retaliation if they have “reasonable beliefs.” show “A rational person in the same de facto situation with the same training and experience would believe that the employer violates the law.”

As the jury trials of whistleblowers in many large corporations have shown in the last decade, retaliation employers will be liable for a considerable amount of money. However, retaliation against whistleblowers is complex and employees considering whistleblowers should seek legal advice.

Whistleblower rescues

The cryptocurrency industry has a sharp learning curve before that. Traditional financial institutions have spent decades responding to and complying with regulations, but cryptocurrencies have traditionally been operated with little consideration for compliance.

Cryptographic whistleblowers can help the industry level the competition by issuing early alerts. By taking whistleblowers’ concerns seriously, crypto industry companies can avoid the inevitable barrage of coercion that they will soon face, saving time, money, and heartache.

Whistleblowers can protect crypto and DeFi – TechCrunch Source link Whistleblowers can protect crypto and DeFi – TechCrunch

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