In response to the lawsuit, Gemini said the company has always been open to constructive regulations and is ready to prove that it is ever abiding by existing rules and regulations governing the nascency of the product categories it offers to investors and traders.
The United States Commodity Futures Trading Commission (CFTC) has filed a lawsuit against cryptocurrency trading platform, Gemini Trust Company LLC for providing false or misleading information to a series of inquiries it made back in 2017. As reported by Coindesk, the CFTC posited that the cryptocurrency exchange misled regulators while attempting to launch what would have been the industry’s first-ever Bitcoin (BTC) futures contract.
“The false or misleading statements and information conveyed or omitted to Commission staff by Gemini directly and through others were material to evaluation of the Bitcoin Futures Contract, including compliance with core principles of the Commodity Exchange Act,” the suit said. “Such statements and information were relevant to, among other things, assessing the size of, liquidity on, and number of market participants using the Gemini Exchange and the Gemini Bitcoin Auction.”
The CFTC claimed that the suit happened in in-person meetings and it relates to false details on questions bordering on how easy it would be for Bitcoin futures contract price to be manipulated.
“In oral and written communications to Commission staff during the Relevant Period, Gemini represented that it was a ‘full reserve’ exchange and that it required all transactions to be fully ‘pre-funded,’” the suit said. “Gemini represented that the ‘prefunding’ aspect of the Gemini Exchange made the Gemini Exchange and the Gemini Bitcoin Auction, and thus the Bitcoin Futures Contract, less susceptible to manipulation because it increased traders’ cost of capital and made improper trading conduct more expensive to malicious actors.”
The CFTC is arguing that the statements shared were either false, misleading or “omitted material information.” It is not uncommon for exchanges to be dragged to court over regulatory imbalances, and for the CFTC to come up with this lawsuit after years, it must have gathered enough evidence to back its accusations.
Gemini Implies It’s Growing on the Good Sides of Regulation
In response to the lawsuit, Gemini said it has always been open to constructive regulations and is ready to prove that it is ever abiding by existing rules and regulations governing the nascency of the product categories it offers to investors and traders alike.
“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,” said CFTC Acting Director of Enforcement Gretchen Lowe said.
In a statement by the exchange’s spokesperson, it was re-affirmed that “Gemini has been a pioneer and proponent of thoughtful regulation since day one. 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.”
Should this case linger on to the court, this will be another high-profile court duet between a regulatory body in the US and a crypto entity, a development that both sides will want to use to set positive precedents in one another’s favor in the long term.
Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
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