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SEC grants 2 Whistleblower Awards Despite Missed Deadline

March 24, 2025

The SEC Whistleblower Program, established in 2010, encourages reporting of securities law violations, including cryptocurrency fraud, by offering awards up to 30% of collected sanctions. A March 24, 2025, whistleblower award proceeding (Release No. 102717) involved four covered actions. Initially, claims for two actions were late, but the SEC waived the filing deadlines due to unique circumstances, such as the claimant’s active military duty and technical fax issues. Ultimately, the claimant received awards for all four actions, highlighting the SEC’s flexibility in procedural matters.

The program has awarded over $2.2 billion to 444 whistleblowers since 2011, with $255 million in FY24, including a notable $98 million shared by two individuals. In FY24, 8% of tips were related to ICOs and crypto assets, underscoring its role in cryptocurrency regulation. Whistleblowers can report anonymously through an attorney, receiving protections against retaliation.

Whistleblower Award Proceeding No. 102717, March 24, 2025, details a proceeding under the Securities Exchange Act of 1934 evaluating claims for four covered actions.

The claimant submitted award claims for four covered actions, each resulting in monetary sanctions exceeding $1 million. For Covered Action 1, the notice was posted on a redacted date with a 90-day deadline, but the claim was submitted approximately three weeks late. For Covered Action 2, the claim was also late, while Covered Actions 3 and 4 had timely submissions. Specific violation details are redacted, but the actions led to court judgments against the parties involved.

The Claims Review Staff (CRS) initially recommended awards for Covered Actions 2, 3, and 4, finding the claimant provided original information leading to their success, and suggested waiving the deadline for Covered Action 2 under Exchange Act Section 36(a). However, for Covered Action 1, the CRS recommended denial due to the late filing. The claimant contested, arguing for waiver due to active military service limiting communication, reliance on counsel, the information’s crucial role, a calendaring error (deadline mistakenly set a month late), the three-week delay not hindering Commission functions, and post-notification contact with the Office of the Whistleblower (OWB) for guidance.

Based on these unique facts and circumstances, the SEC exercised its general exemptive authority under Section 36(a) to waive the filing deadline for both Covered Actions 1 and 2. For Covered Action 1, the waiver was due to the claimant’s military duty, limited communication, and reasonable efforts post-restoration. For Covered Action 2, it was due to technical fax issues on the deadline, with prompt follow-up.

The SEC’s analysis focused on the timeliness requirement but concluded that waivers were warranted for Covered Actions 1 and 2, leading to awards for all four actions. The final decision was to award the claimant a percentage (redacted) of the monetary sanctions collected for each covered action, emphasizing the program’s flexibility in accommodating exceptional circumstances (Whistleblower Award Proceeding No. 102717, p. 4: “The Commission orders that the Claimant receive an award of percent (%) of the monetary sanctions collected, or to be collected, for Covered Actions 1, 2, 3, and 4”).

This case illustrates the program’s strict procedural standards, particularly the 90-day filing deadline under Rule 21F-10(b), and the limited but existent discretion for waivers. The Order specifically suggests that this discretion should not be relied upon by claimants, noting:

While we exercise our Section 36(a) exemptive authority to excuse Claimant’s late WBAPP in Covered Actions 1 and 2 under these unique facts and circumstances, we do not expect to routinely exercise such exemptive authority to waive the requirements under Rules 21F-10(a) and (b) to timely file an award application. The filing deadline serves important programmatic interests and will be typically enforced absent the unique facts and circumstances presented here.

The program’s applicability to ICOs and digital assets is noteworthy. In FY24, 8% of tips involved such allegations, reflecting the SEC’s focus on this sector. While the specific covered actions in the proceeding are redacted, the program’s enforcement actions underscore the SEC’s role in addressing digital asset related fraud. Literature suggests whistleblowers have been instrumental in uncovering cryptocurrency Ponzi schemes and fraudulent ICOs, with potential awards for reporting such violations. (See “Report Cryptocurrency Fraud and Earn a Whistleblower Award“)

The SEC Whistleblower Program was designed to encourage reporting of specific, timely, and credible information about possible federal securities law violations. It is particularly relevant in the cryptocurrency space, where fraudsters often exploit innovations like initial coin offerings (ICOs) and blockchain technology. The program’s official page outlines its purpose: to provide awards to eligible individuals who provide high-quality original information leading to enforcement actions (Whistleblower Program SEC Overview).

As of the end of FY24 (October 1, 2023, to September 30, 2024), the program has awarded over $2.2 billion to 444 individual whistleblowers since 2011, with FY24 seeing over $255 million awarded to 47 whistleblowers. Notable awards include two whistleblowers sharing approximately $98 million, marking the fifth largest in program history (SEC Press Release).

The FY24 annual report highlights key statistics, including approximately 24,980 Tips, Complaints, and Referrals (TCRs) received, with about 14,000 from two individuals, and allegations related to ICOs and crypto asset securities accounting for 8% of tips (SEC FY24 Annual Report, p. 3: “In FY 2024, the Commission awarded over $255 million to 47 whistleblowers, and 8% of allegations involved Initial Coin Offerings and Crypto Asset Securities”).

Whistleblowers can submit tips anonymously through an attorney, which is crucial in any situation where retaliation risks are high. The Dodd-Frank Act provides protections against retaliation, including the right to sue for reinstatement, back pay, and litigation costs.

This case demonstrates that compelling arguments, such as military service or technical issues, can lead to deadline waivers, however claimants rely on the possibly of obtaining a waiver at significant risk. The SEC’s emphasis on timely filings aligns with its goal of efficient administration, but the flexibility shown in this case is encouraging for whistleblowers facing unique challenges.

The article “SEC grants 2 Whistleblower Awards Despite Missed Deadline” first appeared on DigitalAsset.Law on March 24, 2025.

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