It all happens with criminals working their way around the concepts of Proof of Work and Proof of Stake. Simply put, PoW is the cost of producing a Bitcoin, while PoS is the interest fetched on the cryptocurrency owned. But thanks to whistleblowers and the protection given to them, the day is not far when more regulation will come into the world of Crypto.
To start with, crypto fraudsters find ways to avoid the PoW cost: they try to create digital gold with no (or minimal) cost. They want the crypto token to exist so that it can go where people look–the Market Cap & they want to issue it primarily to themselves. By buying and selling the token themselves, the criminals bid it up, thus making it sit at the top of the market cap for as long as they want.
The owners keep issuing the Crypto to themselves at little or no PoW cost and multiplying it with PoS interest. They keep on with this process until enough people buy into the currency at their asking price. The fraudsters then sell out and create another of these ‘no-cost cryptos,’ and the cycle continues.
All because the cost to earn PoS interest is very low, and the interest is earned on the already existing PoW token.
Summing it up
Role of Whistleblowers
Why is there a need for whistleblowers?
There is a lack of transparency and inadequate regulation in the crypto market. In such a scenario, it becomes imperative for the whistleblowers to come forward & report violations.
Though many public statements by the government have warned crypto investors about their legal obligations, the Crypto world remains a Wild West of fraud, tax evasion, and market manipulation.
And so far, the role of whistleblowers seems to be the only thing keeping the industry health intact.