In a letter dated Friday addressed to CFTC Inspector General Christopher Skinner, Gemini Trust asserted that the agency’s Division of Enforcement (DOE) unfairly weaponized the Commodity Exchange Act to bring “dubious” charges against the crypto exchange in 2022.
The charges stemmed from a lawsuit filed by the CFTC in June 2022, alleging Gemini Trust made false or misleading statements in 2017 regarding the susceptibility of its proposed Bitcoin futures contract to manipulation. Gemini settled this suit in January 2024 for $5 million, neither admitting nor denying the CFTC’s findings.
“Selfish desire” and dodgy report alleged
Gemini Trust claims the DOE lawyers involved in its 2022 case harbored a “selfish desire” to advance their careers, which allegedly drove the pursuit of charges against the company. The exchange specifically alleges, “DOE Staff selectively and unfairly weaponized the Commodity Exchange Act … to bring dubious false statements charges against Gemini.”
Citing a “lie-riddled whistleblower submission by a discredited former employee,” Gemini maintains the foundation of the CFTC’s case against it was built on falsified information.
Whistleblower and firing context
The CFTC’s investigation and ensuing lawsuit, according to Gemini, hinged on a whistleblower report dated 2017 from Benjamin Small, Gemini’s former operating chief. The exchange alleges Small was fired in mid-2017 for allegedly authorizing losses from a “multi-million dollar rebate fraud” involving Hashtech LLC and several associated entities, including individuals and companies linked to Cardano.
Gemini contends Small’s dismissal prompted him to file a false whistleblower complaint with the CFTC, specifically alleging failures by Gemini regarding its Bitcoin futures contract. Gemini asserts the CFTC “immediately and unquestioningly” accepted this claim, initiating its investigation into the exchange in 2018.
Gemini disputes the core allegation, stating its Bitcoin futures contract “operated orderly for 19 months” prior and “had no allegation of contract manipulation.” It described the subsequent charges as arising from a “false whistleblower report.”
Requesting DOE reform
Separately, Gemini Trust praised CFTC Acting Chair Caroline Pham’s efforts to reform the Division of Enforcement (DOE), which she described as having engaged in “dubious enforcement actions.” However, the letter reiterates concerns that “this bad-faith behavior” could recur unless systemic changes are made.
Gemini offered its assistance to the CFTC “in whatever capacity they would deem helpful” in this process of overhaul.
