Federal regulator moves to withdraw Gemini settlement agreement
Federal commodities regulators are moving to nullify a settlement worth $5 million that was reached during the Biden administration with Gemini, stemming from allegations that the cryptocurrency platform engaged in deceptive or fraudulent communications.
The Commodity Futures Trading Commission of the United States has petitioned a federal courthouse to nullify the $5 million settlement agreement it reached with cryptocurrency platform Gemini, asserting that the regulatory body's legal action was founded on questionable claims.
The cryptocurrency exchange Gemini reached a settlement agreement with the CFTC and remitted a penalty of $5 million during January 2025 in the closing days of the Biden presidency following accusations by the regulator that it engaged in deceptive or fraudulent communications concerning a Bitcoin futures product.
A collaborative motion was submitted by the CFTC alongside Gemini to a court in Manhattan this Wednesday requesting the settlement be vacated, with the agency declaring in an official statement that it had conducted a review of the situation and determined that the "complaint should not have been filed — and would not have been under current enforcement standards."
According to the CFTC, the legal complaint, which was initiated during the Biden administration's tenure, was "largely based on a whistleblower's account known to be lacking in credibility."
Accordingly, the CFTC determined that continuing enforcement of the consent order's prospective provisions serves neither the CFTC's mission nor the public interest.
This petition from the CFTC represents another addition to an expanding list of cryptocurrency-related legal proceedings and regulatory inquiries that both the agency and the Securities and Exchange Commission have chosen to drop under the administration of President Donald Trump.
Both Tyler and Cameron Winklevoss, who co-founded Gemini, contributed $1 million each to the election campaign of Trump during 2024.
The regulatory agency's motion follows an incident in September when Brian Quintenz, who was Trump's previous nominee for CFTC chair, publicly posted on X communications from Tyler Winklevoss, Gemini's CEO, in which Winklevoss inquired whether Quintenz would be willing to examine the agency's enforcement action against his company should he assume the chairmanship.
Subsequently, Trump retracted Quintenz's nomination and chose to support Mike Selig instead, an attorney who previously represented cryptocurrency firms and who has demonstrated a favorable position toward the digital asset sector.
The regulatory petition aims to terminate the continuing requirements placed upon Gemini as part of the settlement agreement, which included a court order preventing the company from providing deceptive or fraudulent information to the regulatory body.
Applying the remaining provisions — including injunctive relief — prospectively would not be equitable.
The regulatory body acknowledged that Gemini has already remitted the $5 million penalty, though it remained uncertain whether the agency would return the financial sanction.
The enforcement action originated from accusations that Gemini provided fraudulent communications during 2022 throughout the evaluation process of a Bitcoin futures product, specifically concerning the company's auction transaction volumes and market liquidity.
The CFTC stated these allegations were significant for evaluating potential risks and determining whether to approve the contract.
The legal complaint filed by the CFTC depended on testimony from a whistleblower dating back to 2017, who asserted that Gemini artificially inflated its trading activity and transaction volumes in order to misrepresent actual user demand.
The regulatory agency contended in its most recent court filing that the whistleblower's testimony was derived from statements provided by Gemini's previous chief operating officer and an employee under that person's supervision, who purportedly issued threats directed at both Cameron and Tyler Winklevoss, and was purportedly known for providing false information regarding significant facts.
The CFTC additionally contended that Gemini should be considered a victim of fraudulent activity, asserting that a pair of customers took advantage of Gemini's "preferential fee structures through a coordinated rebate-fraud scheme."
The agency further asserted that these two customers confessed to defrauding Gemini of $7.5 million via this fraudulent operation, yet the previous leadership "did nothing with those admissions."
Cointelegraph contacted Gemini and the CFTC for comment.