C4 Professional Ethics & Standards 2

Question 1

A crypto professional discovers their employer is using client funds to cover operational losses without disclosure. What is the MOST ethically appropriate first action?

Accepted Answer

Internally report the issue to compliance or legal counsel

Answer

Reporting internally to compliance or legal counsel follows proper whistleblower and fiduciary duty protocols before escalating externally.

Question 2

Under C4 standards, what does the principle of 'non-malfeasance' require of a cryptocurrency professional?

Accepted Answer

Avoiding actions that cause harm to clients or the market

Answer

Non-malfeasance requires professionals to avoid conduct that harms clients, third parties, or market integrity.

Question 3

A C4-certified professional is asked to endorse a DeFi project they have not personally vetted. What should they do?

Accepted Answer

Decline or conduct thorough due diligence before endorsing

Answer

Professional standards prohibit endorsing products without adequate due diligence to protect the public from misleading recommendations.

Question 4

Which scenario BEST illustrates a conflict of interest for a crypto asset advisor?

Accepted Answer

Recommending a token in which the advisor holds a large undisclosed position

Answer

Recommending assets in which the advisor holds undisclosed positions is a textbook conflict of interest that must be disclosed.

Question 5

According to professional ethics standards, how should a crypto professional handle a request to facilitate a transaction they suspect involves money laundering?

Accepted Answer

Refuse and file a Suspicious Activity Report (SAR) if required by law

Answer

AML obligations require refusing suspicious transactions and filing SARs with FinCEN as mandated by the Bank Secrecy Act.

(C4) CryptoCurrency Certification Consortium Practice Test

(C4) CryptoCurrency Certification Consortium Practice Test

C4 Professional Ethics & Standards 2