Gemini Trust Co. LLC, the New York-based cryptocurrency exchange founded by the Winklevoss twins in 2014, has agreed to settle a lawsuit with the U.S. Commodity Futures Trading Commission (CFTC) by paying a $5 million civil penalty. The lawsuit stemmed from allegations that Gemini made misleading statements about the ease with which the price of Bitcoin futures could be manipulated.
Bloomberg was the first to report on the settlement. Court filings made by Gemini on Monday will prevent the trial, which was set to begin on January 21, from proceeding. As part of the settlement, Gemini neither admitted nor denied the allegations.
In 2017, Gemini served as the price data provider for the first-ever Bitcoin futures contracts traded on the Cboe Futures Exchange. The company also offers a range of digital asset services, including custody and exchange for cryptocurrencies like Bitcoin.
According to the CFTC’s 2022 lawsuit filing, Gemini “knew or reasonably should have known” that the statements it provided regarding the proposed Bitcoin futures contract product were misleading, especially concerning the contract’s potential vulnerability to market manipulation.
U.S. District Judge Alvin Hellerstein approved the settlement, rejecting Gemini’s request to dismiss the lawsuit. The judge had previously ruled that a jury should decide the case’s outcome. As part of the settlement, Gemini is also prohibited from making any further false or misleading statements to the CFTC.
Gemini is one of several companies currently facing regulatory scrutiny in the U.S. It is also involved in a lawsuit filed by the Securities and Exchange Commission (SEC) concerning its Earn program. The SEC has accused Gemini of raising billions of dollars from investors’ crypto assets illegally. In June, the company settled a lawsuit with the New York Attorney General’s office, agreeing to pay $50 million related to the Earn program.
Other significant regulatory actions in the crypto industry include a 2023 lawsuit from the SEC against Coinbase Global Inc., accusing the exchange of operating an unregistered securities exchange. Additionally, crypto exchange Kraken agreed to a $30 million fine with the SEC in the same year and shut down its crypto asset “staking” program in the U.S. Staking allows crypto token holders to earn rewards by locking up their tokens to support a blockchain network, similar to earning interest.
Ian Allison is a senior reporter at CoinDesk, focused on institutional and enterprise adoption of cryptocurrency and blockchain technology, with a particular expertise in Gemini and its role in the evolving digital asset ecosystem. Prior to that, he covered fintech for the International Business Times in London and Newsweek online. He won the State Street Data and Innovation journalist of the year award in 2017, and was runner up the following year. He also earned CoinDesk an honourable mention in the 2020 SABEW Best in Business awards. His November 2022 FTX scoop, which brought down the exchange and its boss Sam Bankman-Fried, won a Polk award, Loeb award and New York Press Club award. Ian graduated from the University of Edinburgh. He holds ETH.