Gemini’s Derivatives Exchange Faces Regulatory Consequences in the Philippines

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Key takeaways:

  • The Gemini Foundation has received a warning from the SEC of the Philippines for operating illegally in the country.
  • In May, Gemini introduced the Gemini Foundation, a platform for non-US derivatives, with the Philippines listed as a supported region.

The Gemini Foundation has received a warning from the Securities and Exchange Commission (SEC) of the Philippines for operating illegally in the country. The Winklevoss-owned cryptocurrency exchange’s recently established derivatives trading platform is under fire from the local securities commission for allegedly providing securities to Filipino investors violating local regulations. 

The SEC of the Philippines issued an advisory earlier today that specifically mentioned the new Gemini derivatives exchange. The platform’s goods included securities, including derivatives like options and futures contracts, the securities regulator emphasized. According to the SEC, selling these products in the Philippines is illegal without first registering with the Commission. The SEC of the Philippines stated:

“GEMINI TRUST COMPANY, LLC’s lack of prior registration with the Commission makes their activities of offering and/or selling securities in the form of derivatives ILLEGAL in violation of the provisions of the SRC.”

The SEC charged Gemini with breaking the Securities Regulation Code by selling securities in the Philippines without the required authorization and acting as a broker/dealer without being properly registered. Filipino traders were advised by the Commission not to put their money into the new derivatives exchange until it had the required licenses. 

The US SEC and the US Commodity Futures Trading Commission had filed complaints against Gemini, according to the Philippines SEC notice, which also cited SEC chair Gary Gensler on Gemini’s Earn program, which the SEC filed a complaint against in January:

“Today’s charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws.”

The Filipino regulator warned Gemini that it might face criminal charges, a fine of up to five million pesos ($90,000), 21 years in jail, or both. This month, the derivatives exchange became operational in 30 nations, including the Philippines. 

The warning to Gemini was made public just hours after Malaysia’s top securities regulator publicly criticized Huobi Global, and legal action was taken against the cryptocurrency exchange for operating unlawfully there. 

The failure of DCG to pay Gemini $630 million, according to an update on the company’s website, triggered a series of events that brought attention to the Bitcoin market.

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