David Edwards
Gemini Trust Company has accused the Commodity Futures Trading Commission’s (CFTC) Division of Enforcement (DOE) of pursuing a 2022 lawsuit against the crypto exchange for self-serving career advancement, based on what it calls a fabricated whistleblower report.
Gemini accused enforcement officials of using the Commodity Exchange Act to submit what the business called “dubious false statements charges” in a letter sent to CFTC Inspector General Christopher Skinner on Friday. According to the exchange, a former employee with personal issues against the company filed a discredited whistleblower disclosure, which led to the allegations.
Center for Whistleblower Allegations in CFTC Lawsuit
While evaluating Gemini’s proposed Bitcoin futures contract for potential market manipulation, the CFTC filed a complaint against the exchange in June 2022, alleging that the exchange had made false or misleading claims in 2017. In January 2024, Gemini paid a $5 million fine to resolve the CFTC’s claims without acknowledging or disputing the agency’s conclusions. Gemini said it “had no other choice” except to settle at the time in a recent letter.
The enforcement action was primarily motivated by allegations made by Benjamin Small, the exchange’s former operating chief who was fired in 2017, according to Gemini. According to the firm, Small was fired for trying to hide losses connected to a multi-million dollar rebate scam that involved trading companies like Hashtech LLC, Cardano Singapore PTE Ltd., and related executives Jonathan David, Alex Ruthizer, and Satoshi Kobayashi.
Gemini claims that these parties, with Small’s alleged approval, manipulated trading activity in order to take advantage of fee structures and obtain illicit rebates. Small allegedly filed a whistleblower complaint with the CFTC after being fired, claiming that Gemini concealed information about possible manipulation of its Bitcoin futures contract.
According to the exchange, CFTC litigators “immediately and unquestioningly” accepted Small’s assertions and began looking into Gemini in 2018. Four years later, the case was filed.
Gemini Attacks the Culture of CFTC Enforcement
Gemini’s letter further argues that the DOE’s litigation was motivated by staffers’ “selfish desire to advance their careers by misusing their offices to obtain a high-profile ‘win’” against the exchange. The business asserts that there have been no accusations of market anomalies or manipulation during the 19 months that their Bitcoin futures contract has been in operation.
The conversation expressed cautious hope that the agency may be undergoing transformation. In May 2024, CFTC Commissioner Caroline Pham asked for measures to stop “dubious enforcement actions.” Gemini cited her recent comments. Gemini commended Pham’s proactive efforts but emphasized that “serious introspection and long-term commitment” will be required to prevent future instances of bad-faith enforcement.
Gemini offered to assist the CFTC in any attempts to change its enforcement procedures as it wrapped up the letter.
