CFTC Charges Gemini Trust Company for Making False or Misleading Statements
CFTC Charges Gemini Trust Company for Making Material False or Misleading Statements and Omissions to the Commission
 — The Commodity Futures Trading Commission today announced it has filed a complaint in the U.S. District Court for the Southern District of New York against Gemini Trust Company, LLC (Gemini), based in New York, N.Y., for making false or misleading statements of material facts or omitting to state material facts to the CFTC in connection with the self-certification of a bitcoin futures product. The CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, injunctions relating to registration and trading, and an injunction against further violations of the Commodity Exchange Act (CEA), as charged.

“Making false or misleading statements to the CFTC in connection with a futures product certification undermines the CFTC’s work to ensure the financial integrity of all transactions subject to the CEA, protect market participants, deter and prevent price manipulation, and promote responsible innovation and fair competition,” said Acting Director of Enforcement Gretchen Lowe. “This enforcement action sends a strong message that the Commission will act to safeguard the integrity of the market oversight process.”

Case Background

The complaint alleges that from approximately July 2017 to around December 2017, Gemini, directly and through others, made false or misleading statements of material facts, or omitted to state material facts, to the CFTC during an evaluation of the potential self-certification of a bitcoin futures contract by a designated contract market (DCM). The proposed bitcoin futures contract was to be settled by reference to the spot bitcoin price on the relevant day as determined by an auction held on Gemini’s digital asset trading platform (Gemini Bitcoin Auction).  

According to the complaint, Gemini, directly and through the DCM, provided information to the CFTC concerning Gemini’s trading platform and the Gemini Bitcoin Auction, and certain statements and information conveyed or omitted by Gemini were false or misleading with respect to, among other things, facts relevant to understanding whether the proposed Bitcoin Futures Contract would be readily susceptible to manipulation. As alleged in the complaint, Gemini personnel knew or reasonably should have known that such statements were false or misleading.

In performing its market oversight responsibilities, the Commission and its staff must be able to rely on information submitted by market participants to the Commission and its staff. Here, as the complaint alleges, the proposed Bitcoin Futures Contract was significant because it was to be among the first digital asset futures contracts listed on a designated contract market, and information provided directly and indirectly by Gemini to the CFTC was important to the CFTC’s work as it sought to fulfill its statutory mission, including ensuring financial integrity of transactions subject to the CEA, protecting market participants, deterring and preventing price manipulation and any other disruptions to market integrity, and promoting responsible innovation.

The Division of Enforcement staff members responsible for this case are Christopher Giglio, Trevor Kokal, David W. Oakland, Alejandra de Urioste, K. Brent Tomer, Lenel Hickson, Jr., and Manal M. Sultan as well as former Enforcement staff member Gates Hurand.

Customers and other individuals can report suspicious activities or information, such as possible violations of commodity trading laws, to the Division of Enforcement via a toll-free hotline 866-FON-CFTC (866-366-2382), file a tip or complaint online, or contact the CFTC Whistleblower Office.  Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the CFTC Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA. 
