Gemini Agrees to $5M Penalty in Proposed CFTC Settlement

The U.S. Commodity Futures Trading Commission (CFTC) has proposed a settlement with Gemini Trust Company that, if approved, could help the crypto firm avoid a looming civil trial. Filed on January 6 in the U.S. District Court for the Southern District of New York, the consent order outlines the resolution of all claims against Gemini, requiring the firm to pay a $5-million civil penalty and adhere to new restrictions on communication with the CFTC.

Background of the Case

The civil case, initiated in June 2022, accused Gemini of providing false or misleading statements regarding its 2017 application to launch Bitcoin futures contracts. Specifically, the CFTC alleged that Gemini engaged in practices, such as bespoke fee arrangements for certain market participants, that were not disclosed on its website and may have influenced trading in the Gemini Auction.

In the proposed settlement, Gemini admits that it “reasonably should have known” its statements were false or misleading during the relevant period (2016–2017). This acknowledgment would close the chapter on the allegations but also bind Gemini from making similar misstatements in the future.

View the full consent order filing.

Avoiding a Civil Trial

This settlement, if approved by a judge, allows Gemini to sidestep the civil trial scheduled for January 21, 2025. A federal judge had already warned in December that no further adjournments would be granted. By agreeing to the proposed terms, Gemini avoids prolonged litigation and potential reputational damage.

Read more about the allegations in the June 2022 filing.

Broader Implications

The proposed settlement is part of a broader crackdown by the CFTC on crypto firms violating U.S. commodities laws. In fiscal year 2024, the commission recovered $17 billion through civil monetary penalties, disgorgement, and restitution from various cases, including those involving crypto firms.

Despite these enforcement efforts, regulatory uncertainty continues. As President-elect Donald Trump prepares for his inauguration on January 20, 2025, he is reportedly considering replacing current CFTC Chair Rostin Behnam. However, unlike the U.S. Securities and Exchange Commission (SEC), no resignations have been publicly signaled by CFTC commissioners.

Learn more about the CFTC’s enforcement activities.

Final Thoughts

Gemini’s willingness to settle suggests its aim to move past this legal hurdle and focus on its business operations. For the crypto industry, this case highlights the importance of transparency and regulatory compliance in interactions with oversight bodies.

What are your thoughts on the CFTC’s approach to crypto regulation? Will settlements like this drive the industry towards stricter compliance or stifle innovation?

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