Gemini Trust’s Response to CFTC Charges
Gemini Trust has characterized the charges brought against it by the Commodity Futures Trading Commission (CFTC) in 2022 as the result of a “self-serving ambition” by the agency’s legal team, asserting that the claims were based on a questionable whistleblower report.
Legal Allegations and Response
In correspondence dated Friday with CFTC Inspector General Christopher Skinner, Gemini’s legal representatives asserted that the lawyers from the CFTC’s Division of Enforcement (DOE) misused their authority to pursue unjustified accusations against the cryptocurrency platform, claiming they sought to elevate their careers through a high-profile case against them.
The controversy traces back to a lawsuit initiated by the CFTC in June 2022, where the agency claimed that Gemini had made false or misleading statements while seeking approval for a Bitcoin futures contract back in 2017. The settlement, reached in January, required Gemini to pay a fine of $5 million without admitting to any wrongdoing, an action the exchange described as necessary under pressure.
Whistleblower Allegations
Central to Gemini’s argument is the assertion that the enforcement action stemmed from a whistleblower report filed by Benjamin Small, a former executive at the company. Gemini accused Small of waging a vindictive campaign after his termination due to alleged misconduct linked to a significant rebate fraud involving multiple parties, including external companies and former colleagues. They maintained that his allegations were unfounded and fueled by resentment following his dismissal.
After being fired for his alleged role in the fraud, Small reportedly disclosed his grievances to the CFTC, stating that Gemini had failed to provide critical information regarding the integrity of its Bitcoin futures contract. According to Gemini, this whistleblower account was accepted by CFTC litigators without question, leading to an investigation that began in 2018.
Operational Integrity and Future Collaboration
Despite these accusations, Gemini contends that its Bitcoin futures contract was successfully operational for 19 months without any allegations of manipulation. In response to the ongoing concerns about the CFTC’s enforcement actions, Gemini noted the proactive steps being taken by acting Chair Caroline Pham towards reforming the agency’s practices. They acknowledged that these changes would require a deep, lasting commitment from the commission to prevent any recurrence of what they describe as “bad-faith behavior.”
Gemini expressed its readiness to collaborate with the CFTC to facilitate necessary improvements in their regulatory approach.
