The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Gemini for providing false information about Bitcoin futures.
The crypto exchange, established by the Winklevoss twins, has been accused of deceiving the CFTC into establishing the first US-regulated Bitcoin futures contract. The CFTC has filed a complaint in federal court in Manhattan, demanding fines and trading and registration prohibitions against the exchange.
Gretchen Lowe, the CFTC’s Acting Director of Enforcement, offered some thoughts on the situation.
“Making false or misleading statements to the CFTC in connection with a futures product certification undermines the CFTC’s work to ensure the financial integrity of all transactions subject to the CEA, protect market participants, deter and prevent price manipulation, and promote responsible innovation and fair competition. This enforcement action sends a strong message that the Commission will act to safeguard the integrity of the market oversight process”
The regulator stated that in 2017, Gemini made false and deceptive comments regarding the preventative measures it was taking to protect its product, Bitcoin-based derivatives, against price manipulation. The crypto exchange allegedly misled the CFTC about its safeguards against people trading against themselves. The regulator claims that the exchange team misled them just days before Cboe Global Markets launched the first BTC futures contract on a CFTC-regulated exchange in 2017. This event symbolizes the beginning of BTC’s meteoric rise in the industry.
According to an excerpt from the CFTC’s 28-page civil action,
“The proposed Bitcoin futures contract] was particularly significant because it was to be among the first digital asset futures contracts listed on a designated contract market, at a time of fervent interest by market participants in obtaining exposure to Bitcoin through the derivatives markets,” said the regulator.
The report also detailed how, during the period in question, Gemini misled the commission staff by claiming to be a “full reserve” exchange that required all transactions to be fully “pre-funded” in both oral and written correspondence. According to the charges leveled against Gemini, the exchange forwarded funds to certain users, allowing them to trade before fully funding their accounts. The crypto exchange was allegedly attempting to increase trading volumes by cutting participants’ capital costs.
Gemini, on the other hand, has refuted all charges, issuing a statement on the subject.
“Gemini has been a pioneer and proponent of thoughtful regulation since day one. We have an eight-year track record of asking for permission, not forgiveness, and always doing the right thing. We look forward to definitively proving this in court.”
The CFTC has been pushing down on all nefarious doings in the cryptocurrency sector, with Tether, Bitfinex, and PolyMarket already paying hefty fines.
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