- The US CFTC has sued Gemini over pre-2017 statements relating to its early bitcoin futures contracts.
- Gemini allegedly provided misleading information about the contract’s vulnerability to manipulation and other matters.
- Gemini says he will defend himself from the charges.
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Gemini, a major crypto exchange, has been sued by the CFTC over statements regarding its initial bitcoin futures contracts.
Litigation concerns bitcoin futures contracts
According to the US Commodity Futures Trading Commission (CFTC), Gemini made false or misleading statements about its plans for a bitcoin futures product during an evaluation in 2017.
The regulator’s press release said Gemini provided misleading information (or omitted information) about whether its futures contracts would be vulnerable to manipulation.
In addition, the text of the suit states that the statements in question pertain to the size and liquidity of the Gemini Exchange and Gemini bitcoin auctions, as well as the number of participants.
The suit also states that the company has made statements that misrepresent its pre-funding requirements. It alleges that Gemini lent money to clients to increase trading volume. In addition, the exchange reportedly sent advances to customers to allow those customers to start trading before their accounts were fully funded.
“Gemini personnel knew or should reasonably have known that [their] The statements were false or misleading,” says the CFTC.
The CFTC stated that the futures contract in question is particularly significant as it was one of the first cryptocurrency futures contracts listed on the designated contract market.
Mithun says it will defend itself
The CFTC through its lawsuit seeks to defraud Gemini of any wrongfully earned profits, collect civil monetary penalties, and impose an injunction on trading and registration.
Mithun has not yet published a public response. However, it is quoted as saying that it is a “proponent of discreet regulation” and has an “eight-year track record of seeking permission.” It plans to prove its case in court.
Gemini is currently the 16th largest crypto exchange with a 24-hour volume of $90 million today. Its futures market also reported 24-hour open interest of $112 million.
Other major exchanges including Coinbase, Kraken and Binance have also been targeted by the CFTC in the past.
Disclosure: At the time of writing, the author of this article owns BTC, ETH and other cryptocurrencies.