On Thursday, the Commodity Futures Trading Commission (CFTC) sued against Gemini Trust Company, a cryptocurrency company founded by Tyler and Cameron Winklevoss. The commission alleges that Gemini misrepresented key details of its exchange and futures contracts during meetings with regulators in 2017.
As punishment, the commission is calling for civil fines and an injunction blocking Gemini and its affiliates from trading commodities or soliciting investments.
The complaint places particular emphasis on Gemini’s Bitcoin Futures Contract, one of the first financial instruments that allows investors to trade based on expectations of a cryptocurrency’s future value. Since the futures contract was linked to the settlement price of Bitcoin on the Gemini exchange, any manipulation of the behavior on the exchange could be considered manipulation of the futures price.
The CFTC claims to have found multiple instances of this type of manipulation. In one case, Gemini allegedly provided unsecured loans to market participants; in other cases, the company would have allowed transactions before the transfers were settled.
“Credits and advances may misleadingly skew the apparent volume, liquidity or number of participants trading on the Gemini exchange and in the Gemini bitcoin auction,” the complaint reads.
Gemini is contesting the claims and plans to challenge the charges in court. “We have an eight-year track record of asking for permission, not forgiveness, and always doing the right thing,” said a Gemini spokesperson. told Coindesk† “We look forward to finally proving this in court.”
Gemini had previously been investigated by the US law firm in Manhattan, but prosecutors reportedly dropped the case earlier this year.
The CFTC has special jurisdiction over futures contracts, but has also filed charges in a number of cases of cryptocurrency fraud unrelated to futures markets. Earlier this yearThe commission filed charges against an alleged Ponzi scheme that embezzled more than $44 million worth of Bitcoin.