Gemini Trust Company is the target of an enforcement action filed by the Commodity Futures Trading Commission (CFTC). The complaint was filed in the U.S. District Court for the Southern District of New York against Gemini for making false or misleading statements of material facts or omitting to state material facts to the CFTC in connection with the self-certification of a Bitcoin futures product.
The CFTC alleges that from around July 2017 to around December 2017, Gemini, directly and through others, made false or misleading statements of material facts, or omitted to state material facts, to the CFTC during an evaluation of the potential self-certification of a Bitcoin futures contract by a designated contract market (DCM). The proposed bitcoin futures contract was to be settled by reference to the spot bitcoin price as determined by an auction held on Gemini’s digital asset trading platform (Gemini Bitcoin Auction).
The CFTC alleges that Gemini, directly and through the DCM, provided information to the CFTC concerning Gemini’s trading platform and the Gemini Bitcoin Auction, which conveyed or omitted information by Gemini that was false or misleading as to whether the proposed Bitcoin Futures Contract would be readily susceptible to manipulation. The complaint claims that Gemini personnel knew or reasonably should have known that such statements were false or misleading.
Acting Director of Enforcement Gretchen Lowe, commented:
“Making false or misleading statements to the CFTC in connection with a futures product certification undermines the CFTC’s work to ensure the financial integrity of all transactions subject to the CEA, protect market participants, deter and prevent price manipulation, and promote responsible innovation and fair competition. This enforcement action sends a strong message that the Commission will act to safeguard the integrity of the market oversight process.”
The CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, injunctions relating to registration and trading, and an injunction against further violations of the Commodity Exchange Act (CEA).