- Gemini has agreed to a $5 million civil penalty to settle charges with the U.S. Commodity Futures Trading Commission (CFTC)
- The settlement resolves allegations that Gemini provided false or misleading information during its 2017 bid to launch a Bitcoin futures contract
- As part of the agreement, Gemini neither admits nor denies the CFTC’s findings and has consented to a permanent injunction
The U.S. Commodity Futures Trading Commission (CFTC) has announced a $5 million settlement with crypto exchange Gemini over its 2017 Bitcoin futures product. This agreement concludes the CFTC’s allegations that Gemini made false or misleading statements during its efforts to introduce the contract, which Gemini initially denied. Under the settlement terms, Gemini has agreed to a permanent injunction and has neither admitted nor denied the regulatory findings.
Auctions Caught CFTC’s Attention
Gemini attempted to launch the first ever Bitcoin futures contract on December 8, 2017, in tandem with Cboe under the ticker XBT, with the CFTC stating that Gemini provided loans to market makers on its platforms in order to “facilitate trading” and in the auction process that set the settlement price for the Bitcoin futures contracts.
In June 2022, the CFTC filed a lawsuit against Gemini, accusing the cryptocurrency exchange of providing inaccurate information during the evaluation of a Bitcoin futures contract in 2017. The proposed contract was to be settled based on the spot Bitcoin price determined by an auction on Gemini’s platform.
The CFTC’s allegations centred on the regular auctions that took place on the exchange which determined the payout buyers and sellers of the futures contracts would receive, with the CFTC alleging that Gemini should have known that statements it made regarding whether a proposed Bitcoin futures contract “would be readily susceptible to manipulation” were false and misleading.
Gemini Decides to Pay Up and Move On
According to a consent order filed in the U.S. District Court for the Southern District of New York, Gemini has agreed to pay a $5 million civil penalty and comply with a permanent injunction. The company did not admit or deny the CFTC’s findings as part of the settlement.
The settlement was approved Monday by US District Judge Alvin Hellerstein, who in November rejected Gemini’s request to have the case dismissed and ruled that a jury would have to determine whether 32 statements by Gemini executives to regulators were misleading.
