US regulator: Gemini bitcoin futures bid is misleading

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US Commodity Futures Trading Commission (CFTC) filed a complaint against Gemini Trust Company in the District Court for the Southern District of New York.

The regulator alleges that from approximately July to December 2017, the company misled regulators in an attempt to obtain approval for its Bitcoin futures product.

The Gemini product was launched at the end2017 in collaboration with Cboe Global Markets. The specificity of the product was that the Bitcoin contract had to be concluded the day before expiration, based on an auction conducted by Gemini, to ensure a close correlation between futures and the BTC spot price.

According to the CFTC complaint, the crypto exchange introducedthe regulator was misled about the principle by which the auction works. The exchange argued that all bets must be pre-funded by traders, and that increasing traders' costs would make their futures product less susceptible to manipulation. However, the company subsequently allowed some individual bidders to begin bidding before their account was funded.

The watchdog claims that Geminioffered incentives in the form of discounts and fee redistributions to increase trading volume. The company also provided trading incentives to some of its individual customers without publicly disclosing them.

As part of the charges, the CFTC is seeking monetary penalties and possibly a ban on trading and listing on the exchange if the court deems such action necessary. 

Previously, CFTC Commissioner Caroline Pham said that investing in digital assets is similar to buying lottery tickets.