Crypto Whistleblowers and the Unicoin SEC Lawsuit: A Case of Alleged Fraud in the Digital Asset Space

Unicoin and the SEC: A Case of Alleged Crypto Fraud

On May 20, 2025, the Securities and Exchange Commission (SEC) commenced a lawsuit against Unicoin, Inc., alleging that the crypto company made fraudulent and misleading statements in connection with the sale and offering of securities called “Unicoin Rights Certificates,” which gave crypto investors the right to receive Unicoin tokens if and when the company decided to produce and distribute the cryptocurrency.

In the complaint, the SEC alleges that Unicoin and its executives engaged in cryptocurrency fraud by misrepresenting to its investors fundamental attributes of Unicoin tokens in an effort to make the purchase of tokens more attractive to investors. Notably, the SEC alleges that the company falsely represented that Unicoins were “asset-backed” by billions of dollars of real estate and equities, and that Unicoin had raised significantly more capital than it actually had. The SEC also alleges that Unicoin falsely claimed that the Unicoin Rights Certificates and Unicoin tokens were “SEC-registered,” when they, in fact, had not been.

How the SEC Uses Crypto Whistleblowers in Crypto Investigations

The lawsuit comes as part of a broader effort by the SEC to rein in cryptocurrency fraud. Earlier this year, the SEC announced the creation of a new Crypto Task Force, focusing on digital asset enforcement. Here, the SEC alleges that Unicoin convinced more than 5,000 investors to invest in Unicoin and raised more than $110 million in connection with its unlawful marketing of its cryptocurrency.

In many of its enforcement actions, the SEC uses whistleblowers, who often work at the company in question, to help uncover fraudulent conduct. Whistleblowers can offer critical insight into how crypto firms operate and make strategic decisions. They can report securities fraud online through the SEC’s Tips, Complaints & Referrals (TCR) portal. Under the TCR program, whistleblowers may also submit their complaint anonymously if an attorney represents them.

How Can a Crypto Whistleblower qualify for an SEC Enforcement Award?

If an individual comes forward with information that leads to a successful SEC enforcement action of more than $1 million, the reporting individual(s) may receive between 10% and 30% of the money collected. While a whistleblower is not required to be an employee of the company at issue, they often are because employees can obtain critical communications or documents in the normal course of their work. The SEC considers multiple factors in assigning an award percentage to a whistleblower, including:

• The significance of the information provided;
• The extent of the assistance provided during the SEC’s investigation;
• The law enforcement interests in deterring violations of the securities laws;
• The timeliness of the reporting;
• To what extent, if any, the individual participated in the unlawful conduct;
• To what extent, if any, the individual participated in the company’s internal compliance systems prior to filing a TCR report.

In addition to issuing awards, the SEC also provide protections against retaliation for crypto whistleblowers. The SEC is authorized to take legal action against employers who unlawfully retaliate against whistleblowers by firing, demoting, or otherwise discriminating against an individual who reports conduct that may violate federal securities laws to the SEC. Moreover, the Dodd-Frank Wall Street Reform and Consumer Protection Act grants individuals the right to sue an employer believed to be discriminating against her for protected whistleblowing activity.

How is Whistleblowing at the SEC Different from Whistleblowing at the DOJ?

The SEC is not the only federal agency which sponsors a whistleblower program. Most notably, the Department of Justice (DOJ) administers a qui tam (whistleblower) program under the federal False Claims Act (FCA). The FCA allows individuals to report government contracting fraud, i.e., when federal contractors misuse government funds. A key difference between the SEC’s and DOJ’s whistleblower programs is that the SEC program focuses on securities violations, and the DOJ’s program encompasses any instances in which federal funds are at issue.

Successful whistleblowers under the FCA are also eligible for awards of up to 30% of the recovered money. In contrast to the SEC’s TCR portal, however, whistleblowers under the FCA report fraud by filing a lawsuit under seal and giving the DOJ a copy of the complaint and substantially all material evidence and information they possess. The DOJ then has 60 days to decide whether it wants to intervene in the case and pursue the claims. If it does, the whistleblower takes a back seat in the government’s prosecution of the case. However, if the DOJ decides not to intervene, the whistleblower is often allowed to pursue the case as a private litigant.

Whistleblowers reporting securities violations to the SEC have historically served a more limited role in an investigation than whistleblowers who file suits under the FCA. This is because whistleblowers who report to the SEC are often limited to providing the “tip,” which triggers an investigation; whereas a whistleblower under the FCA is often expected to assist throughout the course of a civil lawsuit, which can include a trial.

How Can a Law Firm Help Navigate the SEC and FCA Whistleblower Processes?

Obtaining experienced legal counsel is crucial for maximizing your likelihood of success. Lawyers can assist you in navigating complex procedures, including time-sensitive deadlines. With respect to the SEC, securing counsel can also preserve anonymity better by allowing lawyers to interface with the government on your behalf. Most importantly, skilled lawyers can enhance your case by applying the strongest legal theories tailored to your specific circumstances.

The whistleblower attorneys at Miller Shah LLP have extensive experience supporting whistleblowers and navigating the complex process of reporting SEC violations.