The Whistleblower Office in the Division of Enforcement of the U.S. Commodity Futures Trading Commission (CFTC) issued an alert on June 20 to inform the public on how to identify and report potential Commodity Exchange Act violations in the voluntary carbon markets.
The voluntary carbon markets (VCM) are designed to aid the transition to a low-carbon economy through market-based initiatives in which high-quality CO2 credits, or offsets, are purchased and sold bilaterally or on spot exchanges. Like other markets, the VCM can also be subject to fraud and manipulation.
Rostin Behnam, the Chairman of CFTC, said that as CFTC-regulated carbon offset derivatives contracts continue to grow, the agency is actively strengthening its capabilities to uphold the efficiency and dependability of these markets. CFTC remains committed to detecting and taking action against any fraudulent or abusive practices, he also said. “Information from whistleblowers advances the Commission’s enforcement mission and, in turn, further builds integrity and trust in the carbon markets by rooting out fraud and manipulation.”
The organization’s Whistleblower Office will work with whistleblowers that report information on potential fraud such as wash trading, “ghost” CO2 credits, double counting, fraudulent statements, and manipulation of tokenized CO2 markets, among others.
Those who provide such information via the CFTC’s Whistleblower Program may qualify for specific safeguards regarding confidentiality and protection against retaliation. Additionally, if the information provided leads to a successful CFTC enforcement action, there may be opportunities for monetary rewards.
Ian McGinley, the Director of the Division of Enforcement, said CFTC is committed to safeguarding the integrity of CO2 credit markets by combatting fraud and manipulation. “Whistleblowers are invaluable allies in these efforts. We will diligently investigate all credible tips and complaints from whistleblowers relating to carbon credit markets.”