Highlights:
- S. District Judge Alvin Hellerstein approved the settlement after rejecting Gemini’s dismissal request and ruling that a jury should decide the case.
- A notable enforcement action includes a 2023 SEC lawsuit against Coinbase, accusing it of operating an unregistered securities exchange.
A cryptocurrency exchange based in New York and established by the Winklevoss twins in 2014, Tthe Gemini Trust Co. LLC, has agreed to pay a USD 5 million civil penalty to resolve a lawsuit filed by the U.S. Commodity Futures Trading Commission. The lawsuit accused the company of making misleading statements regarding the ease with which the price of bitcoin futures could be manipulated.
The settlement was first reported by sources. Recent court filings from the exchange have averted a trial that was scheduled to start on January 21. As part of the settlement, Gemini neither admitted nor denied any wrongdoing.
In 2017, Gemini provided the price data for bitcoin markets during the launch of the first-ever bitcoin futures contracts on the Cboe Futures Exchange. Additionally, Gemini offers digital asset services for cryptocurrencies like bitcoin, including currency custody and exchange.
The CFTC stated that, at the time, Gemini “knew or reasonably should have known” that its statements about a proposed bitcoin futures contract product and its potential susceptibility to manipulation were false or misleading, according to a 2022 lawsuit filing.
U.S. District Judge Alvin Hellerstein approved the settlement, having previously rejected Gemini’s request to dismiss the lawsuit and ruled that a jury should decide the case. As part of the settlement, an injunction was issued preventing Gemini from making any future false or misleading statements to the CFTC.
Gemini is one of several companies currently facing regulatory enforcement actions in the U.S. and is also involved in a lawsuit with the Securities and Exchange Commission over its Earn product. The SEC alleges that Gemini unlawfully raised billions of dollars by using investors’ crypto assets through the Gemini Earn program. In June, the company reached a settlement with the New York Attorney General’s office, agreeing to pay USD 50 million in relation to the Earn program.
Other significant enforcement actions include a 2023 SEC lawsuit against Coinbase Global Inc., a leading cryptocurrency exchange, accusing it of operating an unregistered securities exchange. That same year, crypto exchange Kraken agreed to pay a USD 30 million fine to the SEC and shut down its crypto asset “staking” program in the U.S. Staking involves crypto token holders earning rewards by locking their tokens for a specified period to help support a cryptocurrency blockchain network, similar to earning interest.
