CFTC Sues Gemini Over Futures Contract Statements

Gemini, a leading crypto exchange, has been sued by the CFTC over statements regarding its earliest Bitcoin futures contracts.

Lawsuit Concerns Bitcoin Futures Contract

According to the U.S. Commodity Futures Trading Commission (CFTC), Gemini made false or misleading statements concerning its plans for a Bitcoin futures product during an evaluation in 2017.

The regulator’s press release says that Gemini gave misleading information (or omitted information) about whether its futures contract would be vulnerable to manipulation.

Furthermore, the text of the suit suggests that the statements in question concern the size and liquidity of the Gemini Exchange and Gemini Bitcoin Auction as well as the number of participants.

The suit also says that the company made statements that misrepresented its pre-funding requirements. It alleges that Gemini loaned money to customers to raise trading volumes. Furthermore, the exchange supposedly sent advances to customers to allow those customers to begin trading before they fully funded their accounts.

“Gemini personnel knew or reasonably should have known that [their] statements were false or misleading,” the CFTC says.

The CFTC added that the futures contract in question is especially significant because it was one of the first cryptocurrency futures contracts listed on a designated contract market.

Gemini Says It Will Defend Itself

The CFTC seeks to have Gemini disgorge any ill-gotten gains, collect civil monetary penalties, and impose injunctions on trading and registration through its lawsuit.

Gemini has not yet published a public response. However, it has been quoted as saying that it is a “proponent of thoughtful regulation” and that it “has an eight-year track record of asking for permission.” It plans to prove its case in court.

Exchange founders Cameron and Tyler Winklevoss have also suggested that they may personally comment on the matter.

Gemini is currently the 16th largest crypto exchange, with a 24-hour volume of $90 million today. Its futures market additionally reported a 24-hour open interest of $112 million.

Other major exchanges, including Coinbase, Kraken, and Binance, have been targeted by the CFTC in the past as well.

Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.