Commodity Futures Trading Commission (CFTC) on Thursday filed A complaint against Gemini Trust Company LLC, led by the Winklevoss twins, in the US District Court for the Southern District of New York.
The market regulator alleges that from approximately July 2017 to December 2017, Gemini misled regulators to “make materially false or misleading statements” in an attempt to gain approval for it. Bitcoin futures product.
Cboe Global Markets launched its bitcoin futures product in December 2017 by partnering with Gemini Trust Company as its pricing provider.
According to product mechanismThe bitcoin contract will be settled on its last day before expiration based on an auction conducted by Gemini to ensure a close relationship between the futures and the spot price of bitcoin.
Specifically, the CFTC alleged that Gemini misled regulators about how this auction worked.
According to Gemini, staking must be entirely pre-funded by traders, telling regulators that increased trader fees will make their bitcoin futures product less vulnerable to manipulation.
Nevertheless, the company allowed some bespoke participants to trade before their account was fully funded.
In the complaint, the CFTC alleged that Gemini offered undeclared incentives in the form of fee waivers and overrides to boost trading volume. The company also provided business incentives for some of its bespoke customers without disclosing it to the public.
These efforts to reduce capital costs for its market participants to boost trading volume were not disclosed to the regulator, and are contrary to the company’s initial statement made during its approval in 2017.
What’s next for Gemini?
As part of the allegations, the CFTC is also seeking monetary penalties and potentially a “trading and registration ban” on the exchange should the court do so.
A Gemini spokesperson said in a statement that they plan to fight the charges in court.
“We have an eight-year track record of asking permission, not being apologetic and always doing the right thing,” a Gemini spokesperson said. Told Reuters, “We look forward to definitively proving it in court.”
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