A Malicious Campaign To Bring Gemini Down

CFTC's lawsuit with Gemini has resurfaced three years after it was resolved after the exchange company publicly accused the Commodity Futures Trading Commission of using the lawsuit as a ploy to advance their own careers.

The entire lawsuit was pivoted on the statement of a whistleblower, who Gemini revealed was a disgruntled ex-employee of the exchange who is trying to get back at his company for firing him.

The whistleblower was the exchange's former operating chief, Benjamin Small, who was allegedly trying to hide losses stemming from a multi million dollar rebate fraud in mid-2017.

Gemini claimed that the fraud involved Hashtech LLC, its executives Alex Ruthizer and Jonathan David, Cardono Singapore PTE Ltd, and its executive Satoshi Kobayashi.

The company alleges that Small’s whistleblower report—which claimed Gemini failed to disclose material information to the CFTC—was riddled with falsehoods.

Despite this, Gemini says the CFTC’s enforcement division “immediately and unquestioningly” embraced Small’s claims and launched an investigation in 2018.

Settlement and Ongoing Criticism

In January, Gemini agreed to pay a $5 million civil monetary penalty to settle the CFTC’s claims, without admitting or denying the agency’s findings.

The exchange has since argued that it “had no other choice” but to settle, given the circumstances and the pressure of the legal process.

Gemini’s legal team has been vocal about the negative impact of the case, criticizing the CFTC for what it describes as an “abusive investigation and lawfare” that wasted taxpayer resources and damaged the company’s reputation.

Gemini also highlighted that its Bitcoin futures contract operated smoothly for 19 months, with no allegations of manipulation or harm to market participants.

The exchange contends that the CFTC’s actions were not motivated by a desire to protect consumers or uphold market integrity, but rather by a quest for high-profile legal victories.

Calls for Reform and Willingness to Assist

In its letter, Gemini acknowledged that CFTC Acting Chair Caroline Pham has taken steps to reform the Division of Enforcement, particularly after a court sanctioned the agency in a separate case in May.

Gemini expressed support for these efforts, stating that “this transformation will require serious introspection and long-term commitment from the agency as a whole to ensure that this bad-faith behavior never happens again.”

The exchange also offered to assist the CFTC in any capacity deemed helpful, signaling a desire for constructive change within the regulatory body.