Gemini Accuses CFTC of Abusive Tactics, Faulty Whistleblower Case in Scathing New Complaint
Crypto exchange Gemini is pushing back hard against the Commodity Futures Trading Commission (CFTC), filing a blistering complaint that alleges years of regulatory overreach, flawed legal strategy, and misuse of public resources. The complaint—submitted to the CFTC’s Office of Inspector General—calls out what Gemini describes as a “toxic” culture within the agency’s Division of Enforcement (DOE), claiming it pursued an unfounded case built on discredited whistleblower evidence.
At the heart of the seven-year legal saga is a whistleblower complaint filed in 2017 by former Gemini Chief Operating Officer Benjamin Small. He alleged that Gemini misled regulators about the vulnerability of its auction mechanism used in the Bitcoin futures product listed by Cboe. But Gemini now says those claims were false, and that Small, who was later fired for gross negligence, had a personal vendetta against the firm.
“Mr. Small’s retaliatory reports had their intended effect,” said Gemini’s lawyer, Jack Baughman, in the complaint. “The DOE Staff immediately and unquestioningly embraced Mr. Small’s false claims.”
According to Gemini, not only was Small’s whistleblower account debunked during arbitration—where a $5 million judgment was rendered against him—but federal prosecutors also declined to bring charges. The Bitcoin futures contract in question, Gemini argues, operated without issue for 19 months and caused no harm to market participants. Yet, the CFTC moved forward with legal action in 2022, years after evidence had surfaced casting doubt on the whistleblower’s credibility.
Gemini settled the case earlier this year with a $5 million penalty, without admitting wrongdoing. But now, the company is challenging what it sees as a systemic problem within the agency.
"There is something deeply wrong with the DOE and its culture when it not only condones but encourages its staff to engage in lawfare," Baughman wrote.
The timing of the complaint is notable, as the U.S. crypto regulatory landscape enters a period of potential reform. President Donald Trump has pledged to overhaul federal financial watchdogs, including the CFTC. His nominee for CFTC chair, Brian Quintenz, has promised to bring clarity to digital asset oversight and move away from what critics call “regulation by enforcement.”
Baughman pointed to internal dissent within the CFTC, quoting Acting Commissioner Caroline Pham’s 2024 reform agenda, which warns of the agency’s need for serious introspection. He argued Gemini’s experience fits the very pattern Pham described—where enforcement becomes a career-building tool rather than a means of market protection.
The complaint also highlights a broader concern about missed priorities. While the CFTC aggressively pursued Gemini, it never took action against the two traders who exploited a rebate loophole and triggered the internal losses that led to Small’s whistleblower report.
“The economic damage the DOE has caused, the innovation it has destroyed, and the American taxpayer money it has incinerated is significant,” Baughman wrote.