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US Regulators Sue Gemini Over False 2017 Statements

The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Gemini Trust Company LLC. The regulator alleges that the New York-based crypto exchange was deceptive in responding to questions regarding a BTC-backed futures contract. 

At present, the CFTC is asking for monetary penalties against the exchange, and other punitive measures, which include stopping Gemini from trading commodities.

The CFTC’s Complaints

The crypto trading firm and its staff, headed by billionaire twins Cameron and Tyler Winklevoss, are currently under fire. Earlier today, CFTC filed its 28-page civil suit in a Manhattan federal court. It slammed Gemini with charges claiming the exchange firm violated the federal Commodity Exchange Act and other guidelines.

Gemini’s alleged “false and misleading statements” reportedly occurred over in-person discussions between both parties. The  CFTC places the time frame for these meetings between July to December 2017. During this period, the commission reviewed Gemini’s function and its Bitcoin Auction. 

Moreover, the regulators claim the Gemini team misinformed them on how susceptible the BTC futures contract price was to influence. Indeed, the exchange’s futures contract was noteworthy as a pioneer tool through which investors could trade based on a digital asset’s anticipated value. 

As per the complaint, the contract in question was tied to Gemini’s BTC settlement value. Therefore, any manipulation on their part extended to the futures price. According to the CFTC, it has seen multiple incidents showcasing these types of price manipulations.

In addition, the trading platform reportedly provided users with unsecured loans and also permitted trades before users completed transfers.  However, the complaint did not reveal if the case ties to Gemini’s collaboration with Cboe to release the first BTC futures contract.

Gemini’s Response

The platform is set to oppose the allegations in court; Gemini spoke out, saying they had a good history. The Manhattan US attorney’s office has probed into the company in the past. However, prosecutors let the charges drop a few months ago.

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.” Gemini said.

The federal commission is calling for the repayment of unlawful gains, and Gemini may have to face civil fiscal penalties. Additionally, they are after an order to ban the platform from offering its commodity trading and investment services.

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According to the CFTC’s director of enforcement, Gretchen Lowe, the filing sends a major message. It shows that the commission will take the necessary steps to ensure the market oversight process remains principled.

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