CFTC Brings Lawsuit Against Gemini for a 2017 Bitcoin Futures Inquiry Fraud

The Commodity Futures Trading Commission (CFTC) has charged Gemini exchange for a Bitcoin Futures case that dates back to 2017.

The CFTC said the trading platform misinformed the commission when it requested some details to gain some insights into the Futures product the exchange planned to launch in conjunction with the Chicago Board of Mercantile Exchange (CBOE).

The commission’s inquiries bordered on how the price of a Bitcoin futures contract could be manipulated. The commission said the false statements given were made in in-person meetings at the time.

“The false or misleading statements and information conveyed or omitted to Commission staff by Gemini directly and through others were material to evaluation of the Bitcoin Futures Contract, including compliance with core principles of the Commodity Exchange Act,” the suit said. “Such statements and information were relevant to, among other things, assessing the size of, liquidity on, and number of market participants using the Gemini Exchange and the Gemini Bitcoin Auction.”

The lawsuit later noted that;

“In oral and written communications to Commission staff during the Relevant Period, Gemini represented that it was a ‘full reserve’ exchange and that it required all transactions to be fully ‘pre-funded,’” adding further that. “Gemini represented that the ‘prefunding’ aspect of the Gemini Exchange made the Gemini Exchange and the Gemini Bitcoin Auction, and thus the Bitcoin Futures Contract, less susceptible to manipulation because it increased traders’ cost of capital and made improper trading conduct more expensive to malicious actors.”

Gemini’s Response to the CFTC Lawsuit

It is not uncommon for the CFTC to bring enforcement actions against crypto entities, and by design, a response is expected.

In response to this current lawsuit, a Gemini spokesperson said, “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 entire charges are still evolving and more unravelings will be made in the near future, just as the ongoing legal brawl between Ripple Labs and the United States Securities and Exchange Commission (SEC).