Gemini says it had ‘no choice’ but to settle with CFTC

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Five months ago, Gemini and the CFTC agreed to a settlement of $5 million related to a 2022 lawsuit from the CFTC alleging that the crypto exchange made false or misleading statements about a bitcoin futures contract it wanted to launch. 

Gemini sent a letter via its lawyers to the CFTC’s Inspector General Christopher Skinner alleging that the Division of Enforcement (DOE), which led the suit, didn’t act in good faith.

The 13-page document claims the DOE “was not motivated by a principled application of the law or a desire to protect the commodities markets.”

The letter alleges, instead, that the individuals involved in Gemini’s case sought to go after Gemini in the hopes of gaining a legal win. But Gemini’s not the only one who’s been critical of the DOE recently. 

A court sanctioned the CFTC back in May in a case led by the regulator against Traders Global Group. This led to acting chairman Caroline Pham making a public statement about her concerns with the DOE and the efforts she’s since undertaken to reorganize it. 

Now Gemini is making its own public statement, alleging that DOE staff failed to provide any evidence proving that information was omitted about the bitcoin futures contract. 

(The background of this is that an ex-employee, who was terminated, allegedly lied to the CFTC in a whistleblower report that led to this whole suit.)

Its letter directly referenced the case above, noting that the DOE also tried to “downplay its wrongdoing” to the Commission. 

Gemini said it got to the point where it had “no choice” but to agree to the $5 million settlement.

“Gemini Trust did not settle because it did anything wrong…For nearly seven years, the DOE Staff subjected Gemini Trust to abusive investigation and litigation. As detailed above, the DOE Staff took extraordinarily aggressive legal positions and abused special governmental privileges in order to substantially hinder Gemini Trust’s ability to defend itself,” Gemini claims. 

It is important to note that while Gemini agreed to a permanent injunction, it did not admit or deny the CFTC’s allegations. However, that is standard in these types of settlements.

You may be wondering why we’re bothering to talk about this, especially since we’re in such a new era. But remember when big players, like Coinbase’s Brian Armstrong, said they wouldn’t hire or interact with firms that brought on ex-SEC enforcement lawyers? This is a similar situation.