In a significant development for the cryptocurrency industry, Gemini Trust, the exchange led by the Winklevoss twins, Tyler and Cameron Winklevoss, has agreed to settle with the Commodity Futures Trading Commission (CFTC) by paying $5 million to resolve allegations brought against it.
Gemini Settles CFTC Allegations Over Deceptive Bitcoin Futures Launch
As reported by Bloomberg, the settlement addresses claims that Gemini misled the regulator during the process of launching the first-ever US-regulated Bitcoin futures contract. The proposed settlement, which was disclosed in a joint court filing on Monday, prevents a trial that was set to begin on January 21, the same day as Donald Trump’s second inauguration.
The CFTC initially filed the lawsuit in 2022, alleging that Gemini made “false and misleading statements” about its efforts to prevent market manipulation in Bitcoin prices. These prices were intended to serve as a benchmark for cryptocurrency derivatives.
The complaint claims that between July and December of 2017, Gemini provided deceptive information to the CFTC while the agency evaluated whether to approve a self-certification for a Bitcoin futures contract.
Allegations of Misleading Statements
The proposed Bitcoin futures contract was to be settled based on the spot price of Bitcoin determined by the Gemini Bitcoin Auction, a digital asset trading platform operated by Gemini.
The CFTC argued that some statements made by Gemini were misleading, omitting crucial details needed to understand the potential for manipulation in the proposed contract.
Regulatory Scrutiny of the Cryptocurrency Industry
According to the CFTC’s complaint, Gemini employees either knew or should have known that their statements could deceive the regulator, which relies on accurate information from market participants to carry out its oversight duties.
This Bitcoin futures contract was especially important, as it was expected to be among the first digital asset futures contracts offered on a designated contract market. The reliability of the information provided was key for the CFTC to maintain the integrity of financial transactions and protect market participants from manipulation or other disruptions.
This enforcement action is part of a broader effort by the Biden administration to regulate the cryptocurrency sector, as the US government seeks to introduce more oversight of the industry. The upcoming inauguration of Donald Trump, often seen by many in the crypto space as a potential ally, raises questions about the future direction of cryptocurrency regulation in the United States.
Previous Compliance with Subpoenas
In a related matter, Gemini had previously complied with subpoenas demanding laptops from two former executives during a criminal investigation, which ultimately did not result in any charges.
As of writing, Bitcoin, the leading cryptocurrency, is trading at $102,130, marking its highest price in over two weeks, with a 10% increase over the past week.
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.