Gemini Settles CFTC Lawsuit Over Bitcoin Futures Market Manipulation Allegations

The Gemini Trust Co. LLC, the New York-based cryptocurrency exchange founded by the Winklevoss twins in 2014, has agreed to pay a $5 million civil penalty to settle a lawsuit filed by the U.S. Commodity Futures Trading Commission over allegedly misleading statements it made about how easily the price of bitcoin futures could be manipulated.

Cryptocurrency exchange Gemini has agreed to pay a $5 million civil penalty to settle a U.S. Commodity Futures Trading Commission lawsuit that accused the company of making false or misleading statements about how easily the price of bitcoin futures could be manipulated, according to a court filing Monday.

The settlement, which was first reported by Bloomberg, will help the New York-based exchange avoid a trial that was set to begin Jan. 21. In the settlement, Gemini did not admit or deny any wrongdoing.

Founded in 2014 by the Winklevoss twins, Gemini is known for providing digital asset services for cryptocurrencies, including bitcoin, such as currency custody and exchange. The company also acted as the price data provider for bitcoin markets for the first-ever bitcoin futures contracts that traded on the Cboe Futures Exchange in 2017.

However, the CFTC alleged that at the time, Gemini “knew or reasonably should have known” that the statements the company gave were false or misleading regarding a proposed bitcoin futures contract product and how it could be susceptible to manipulation, according to a 2022 lawsuit filing.

The settlement was approved by U.S. District Judge Alvin Hellerstein, who had earlier rejected Gemini’s request to dismiss the lawsuit and ruled that a jury should determine the outcome. Part of the settlement included an injunction against Gemini making any further false or misleading statements to the CFTC.

Gemini is among several companies facing regulatory enforcement actions in the U.S. Currently, the company is also facing a suit by the Securities and Exchange Commission over its Earn product. According to the SEC, the company used the Gemini Earn program to illegally raise billions of dollars based on investors’ crypto assets. The company settled a lawsuit with the New York Attorney General’s office for $50 million regarding the Earn program in June.

Other notable enforcement actions include a 2023 SEC lawsuit against Coinbase Global Inc., a major cryptocurrency exchange, alleging that the exchange has been operating an unregistered securities exchange. In the same year, crypto exchange Kraken agreed to pay a $30 million fine to the SEC and shut down its crypto asset “staking” program in the U.S. Staking is a process where crypto token holders earn rewards by locking up their tokens for a set period to support a cryptocurrency blockchain network, which is akin to earning interest.

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