The crypto exchange Gemini, founded by the Winklevoss brothers, has agreed to pay $5 million to settle a lawsuit with the U.S. Commodity Futures Trading Commission (CFTC).
Settlement with CFTC
The case against Gemini involved allegations of misleading statements made during the attempt to launch the first U.S.-regulated Bitcoin futures. This settlement avoids a trial scheduled for January 2022 and includes no admission of wrongdoing from Gemini.
Gemini's Legal Troubles
Gemini's challenges extend beyond the CFTC lawsuit. In 2017 and 2018, the Manhattan U.S. Attorney's Office investigated the company. Former employees Benjamin Small and Shane Molidor were required to hand over company-issued laptops. No criminal charges were filed, but Benjamin Small became a whistleblower after leaving the company. Shane Molidor moved on to become the CEO of AscendEX.
Market Manipulation Allegations
The CFTC claims that Gemini loaned funds to market makers to boost trading activity, weakening protections against price manipulation. Internal communications also suggest a lack of concern over self-trading, potentially distorting Bitcoin prices. The investigation includes examination of internal discussions related to Gemini's presentation of its CFTC futures applications.
The settlement with the CFTC marks a key development for Gemini as the company faces regulatory challenges amidst increased scrutiny of the crypto industry.
