Crypto exchange Gemini has filed a complaint with the CFTC Inspector General, accusing the agency’s enforcement division of conducting a vindictive seven-year “lawfare” campaign prioritizing career advancement over legitimate regulation and consumer protection.
The 13-page complaint, filed on June 13 with Inspector General Christopher Skinner, alleges that enforcement lawyers “selectively and unfairly weaponized” federal law to bring “dubious false statements charges” against the Winklevoss twins’ exchange.
Despite all these, the CTFC never produced evidence of intentional wrongdoing throughout seven years of investigation and discovery.
Gemini Paid $5M Settlement to CTFC, Then Came After Falsehood
The scathing allegations come just months after Gemini paid a $5 million settlement in January 2025 to resolve a case allegedly stemmed from a “lie-riddled whistleblower submission by a discredited former employee” seeking revenge after being terminated for facilitating fraud.
The complaint names nine specific CFTC enforcement lawyers, including Manal Sultan, K. Brent Tomer, and David Oakland, accusing them of pursuing fabricated claims driven by “selfish desire to advance their careers” rather than principled law enforcement.
Gemini argues that the entire investigation originated from false allegations made by former Chief Operating Officer Benjamin Small, who was fired in 2017 for his role in a $7.45 million rebate fraud scheme perpetrated by customers Hashtech LLC and Cardano Singapore.
A 2022 arbitrator ruling found that Small “fraudulently procured his employment,” “lied repeatedly about his experience,” and made false statements in his whistleblower submission.
Yet, the CFTC continued pursuing Gemini while taking no action against Small, who may now receive a $1.5 million whistleblower award.
From Victim to Target: How a Fraud Case Became a Regulatory Nightmare
The origins of Gemini’s regulatory ordeal date back to summer 2017, when the exchange fell victim to a sophisticated multi-million dollar rebate fraud orchestrated by two customers working in coordination with Benjamin Small, then the exchange’s Chief Operating Officer.
Small was aware of the substantial losses but failed to stop the fraudulent trading and attempted to conceal the scheme from Gemini founders Cameron and Tyler Winklevoss.
Upon discovery of the fraud, Small and other complicit employees were immediately terminated for cause, while Gemini successfully sued the perpetrators and recovered all improperly earned rebates totaling 388 bitcoin and $1.7 million.
Rather than accepting responsibility for his role in the fraud, Small embarked on what he described as a vindictive campaign to “destroy” Gemini Trust, filing false whistleblower reports with the CFTC in late 2017.
His allegations centered on claims that Gemini had omitted material information in statements to regulators regarding the exchange’s bitcoin auction pricing mechanism and its susceptibility to manipulation.
The CFTC enforcement division “immediately and unquestioningly embraced” Small’s false claims, launching an investigation in early 2018 with what Gemini describes as a “predetermined outcome” to sue the exchange.
Letter from J. Baughman to CFTC Inspector General Source: Eleanor TerrettMore damning still, a 2022 JAMS arbitrator rendered a $5 million judgment against Small, delivering a “scathing decision” that found he had fraudulently obtained his employment, was terminated for gross negligence, and had lied repeatedly throughout his career.
Regulatory Double Standards and Prosecutorial Misconduct
Gemini’s complaint reveals disturbing selective enforcement where the CFTC ignored actual criminals while pursuing dubious charges against the exchange.
Despite clear evidence of intentional fraud by Hashtech, Cardano, and co-conspirators, enforcement lawyers chose not to prosecute these wrongdoers, instead planning to use testimony from admitted criminals against Gemini.
The enforcement division employed abusive litigation tactics, embracing an “extraordinarily broad view” of deliberative process privilege to deny Gemini access to potentially exculpatory evidence.
This approach created what Acting Chairman Pham has warned against: a situation where defendants are “presumed guilty with no way to prove innocence.”
The timing of the complaint proves particularly significant as it coincides with Gemini’s ambitious expansion plans, including a confidentially filed IPO registration with the SEC and reported progress toward securing a Malta license for pan-European operations under new EU crypto regulations.
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