Normally, when a company reaches a settlement with a regulatory agency, that is the end of the matter. Gemini Trust, a cryptocurrency exchange, has another idea.
In January, Gemini agreed to pay a $5 million fine to resolve a case brought by the Commodity Futures Trading Commission alleging the company made false statements during an investigation relating to its exchange and futures contracts. Gemini neither admitted nor denied the misconduct.
Now Gemini is attacking the CFTC by filing a pugnacious complaint with the agency’s inspector general. The 13-page document alleges that the CFTC’s Enforcement Division is “out of control and that its culture is toxic.” It claims that agency staffers were “not motivated by a principled application of the law or desire to protect the commodities markets. Rather, these lawyers were driven by a selfish desire to advance their careers by misusing their offices to obtain a high-profile ‘win.’”
Gemini’s complaint criticizes by name the lead CFTC lawyer on the case, who is accused of making false statements about the matter in the bio posted on the website of the law firm he joined after leaving the agency.
The facts of the Gemini case are complicated. I will not attempt to summarize them or assess the validity of the CFTC’s case.
What concerns me is whether Gemini’s move is a sign of things to come as companies feel emboldened by the anti-regulatory rhetoric of the Trump Administration to assail regulators in unprecedented ways. The Gemini complaint incorporates MAGA-style rhetoric by accusing the CFTC of seeking to “weaponize and tilt the scales of justice in its favor” and engaging in “trophy-hunting lawfare.”
It is worth noting that the CFTC case is not the only time Gemini, which was founded by the Winklevoss brothers, known for their legal disputes with Mark Zuckerberg, has run afoul of regulators.
Last year, in a settlement with the New York Department of Financial Services, Gemini agreed to return at least $1.1 billion to customers and pay a $37 million fine to resolve allegations it failed to conduct due diligence on Genesis Global Capital, an unregulated third party that allowed Gemini customers to loan their virtual currency and receive interest payments. Genesis defaulted on its loans and declared bankruptcy in 2023.
Also last year, Gemini agreed to pay $50 million to resolve allegations it misled thousands of investors on the risks associated with one of its investment programs.
Given the way the Trump Administration and Congressional Republicans are boosting cryptocurrency, it is not surprising that a company such as Gemini would feel confident in going after one of the main agencies involved in oversight of the business.
It is unclear what Gemini expects to accomplish with its complaint. The CFTC has already been weakened by the departure of many staff members since the new administration took office. The man Trump has nominated to head the agency is Brian Quintenz, who served as a commissioner during the first Trump administration and who has close ties to the cryptocurrency industry. On his X social media page he describes himself as a “financial freedom advocate.” An analysis published in the National Law Review said that his nomination “portends a potential shift towards a more business-friendly regulatory approach.”
Perhaps Gemini is paving the way for Quintenz, who would initially run the commission single-handledly, to rescind the settlement and return the $5 million. This would be another unfortunate step in the Trump Administration’s effort to rewrite the history of enforcement at the same time that it undermines its future.