As an employee in the technology or cryptocurrency industry, you hoped to put your skills to use behind a company that could make a real difference in the world. However, both tech companies and cryptocurrency companies occupy an incredibly competitive and, in some cases, underregulated space. The pressure to succeed, while an incredibly powerful motivator, can become problematic when management’s decisions become unethical or even illegal. Too often, employees who have knowledge of a tech or crypto company’s wrongdoings are put in an incredibly difficult situation, making them choose to “do what’s right” or do what they’re told.” To incentivize workers to bring the unlawful or unethical behavior of their employer to light, the federal government has implemented several whistleblower programs. Successfully pursuing a tech or crypto whistleblowers claim not only provides protection against retaliation but also may result in an employee recovering a percentage of the funds recovered by the government from their employer.
If you work for a technology or cryptocurrency company and believe that your employer’s policies run afoul of the law, bringing a tech whistleblower claim could allow you to expose your employer’s actions without fear of losing your job. Additionally, if successful, you may be entitled to financial compensation. Of course, these claims are not often complex, both legally and practically. A dedicated tech and crypto whistleblower attorney can help workers navigate this difficult landscape, ensuring they comply with the regulatory requirements without unnecessarily exposing themselves to retaliation or liability.
What Is a Tech Whistleblower?
A whistleblower is a person who possesses certain knowledge about an organization’s unethical or illegal conduct and comes forward to report that activity to the government despite pressure from the organization to keep quiet.
While it’s easy to think that the pressure a whistleblower faces to remain silent is easily surmountable, that isn’t always the case. Often large tech and crypto companies will frame these issues in terms of what’s best for consumers, what’s best for investors, or what’s best for fellow employees, making it challenging for an employee to come forward. However, at the end of the day, most companies intend to sweep their illegal activity under the rug for more selfish reasons: money, power and influence.
Types of Crypto Whistleblower Claims
Technology, and especially cryptocurrency companies, operate in industries that are traditionally highly regulated. However, one of the primary draws of crypto is that it is largely unregulated. Thus, despite a strict compliance framework being in place for other types of finance companies, cryptocurrency companies are not always bound by the same rules and regulations.
The following are the most common types of crypto whistleblower claims:
- Market manipulation;
- Money laundering;
- Tax evasion;
- Ponzi schemes;
- Rug pulls,
- Insider trading;
- Unregulated sales;
- Failure to disclose cybersecurity breaches;
- Operating an unregistered digital asset; and
- Making false or misleading statements to investors.
Tech and Crypto Whistleblower Laws
Cryptocurrency and technology workers have a few different statutes they can rely on when bringing a whistleblower claim.
The False Claims Act
The False Claims Act is a federal law that prohibits any company from defrauding a government organization. The qui tam provision of the False Claims Act also provides financial compensation to anyone who brings a company’s fraud against the government to light. Cases filed under the False Claims Act remain under seal while they are being investigated by the government. If the government decides to intervene in the case, federal investigators take over the investigation. However, even if the government decides not to involve itself, an employee is free to pursue their claim independently. In either case, if the claims of fraud are substantiated, the employee is entitled to a portion of the recovered funds.
The Securities and Exchange Commission Whistleblower Program
The Securities and Exchange Commission (“SEC”) has its own whistleblower program designed to uncover investor fraud. While the SEC’s program shares many similarities with the False Claims Act, there are also key differences. For example, the Office of the Whistleblower is permitted to provide compensation to a reporting tech worker who exposes investor fraud resulting in a total recovery of more than $1 million. A whistleblower’s share of the recovered funds ranges from 10 to 30 percent. However, unlike the False Claims Act, the SEC whistleblower’s program does not permit an employee to proceed with an action if the SEC decides not to intervene.
Between 2010 and 2020, the SEC’s Office of the Whistleblower received $2.7 billion from companies and paid out more than $562 million in whistleblower rewards.
The types of fraud exposed through the SEC whistleblower’s program include the following:
Accounting fraud;
- EB-5 investment fraud;
- Foreign bribery and FCPA violations;
- Fraudulent securities offerings;
- Improper revenue recognition;
- Inadequate internal controls;
- Investment fraud;
- Ponzi schemes; and
- Violations of auditor independence rules.
The Internal Revenue Service Whistleblower Program
The Internal Revenue Service (“IRS”) also has a whistleblower program operated by the IRS Whistleblower Office. The threshold amount required to bring an IRS whistleblower claim is $200,000, including all tax, penalties, interest, additions to tax, and additional proceeds.
The Commodities Futures Trading Commission (“CFTC”) and the U.S. Department of Treasury also have whistleblower programs, each with slightly different rules.
Of course, not each of the preceding laws applies in every situation, so it is important to seek a tech whistleblower attorney’s advice to determine the best course of action in these highly strategic cases.
Will an Employer Know Who Blew the Whistle?
Generally, whistleblower laws contain confidentiality provisions, meaning that an employee is either able to anonymously report their employer’s actions or the case is sealed as the government conducts its investigation. Of course, there are exceptions when the government may be required to disclose a whistleblower’s name. However, to maintain confidentiality, a tech or crypto whistleblower must be represented by an attorney.
Does an NDA Prevent an Employee from Disclosing an Employer’s Fraud?
No. Non-disclosure agreements will generally not prevent a tech or crypto employee from blowing the whistle on an employer’s illegal conduct. This is because non-disclosure agreements cannot be enforced to prevent an employee from disclosing an employer’s illegal conduct. If an NDA attempts to prohibit this type of disclosure, it is invalid and unenforceable. However, employees who are subject to an NDA must take care in how they prepare and file their claim, as it is possible to inadvertently run afoul of a legitimate NDA’s terms when pursuing a tech or crypto whistleblower claim.
Employees in the tech and crypto industry who know about their employer’s fraudulent activity should reach out to a whistleblower lawyer for assistance. Not only will an attorney be able to advise an employee on their rights and how to pursue an effective tech whistleblower claim, but it also can provide reassurance that the employee’s actions do not open themselves up to unnecessary liability.
