Gemini to Exit the US Market

Photo - Gemini to Exit the US Market
Due to increasing pressure from American regulators, many cryptocurrency exchanges are leaving the US markets. Is Gemini the next one to follow suit?
Gemini, the cryptocurrency exchange operated by the Winklevoss twins, has announced that it will launch a platform outside of the United States. The company's statement reads: 
We are thrilled to announce the upcoming launch of Gemini Foundation — a non-US crypto derivatives platform. Our first derivatives contract will be a BTC perpetual contract denominated in Gemini dollars (GUSD). An ETH/GUSD perpetual contract will launch soon thereafter.
This means that crypto holders in Hong Kong, El Salvador, Israel, and Turkey will be able to place bets on the future price of cryptocurrencies, while Americans will not have access to this service.

This move was triggered by intense pressure from American regulators on crypto projects. It can be compared to the actions of Chinese lawmakers who pushed digital activities, including mining, out of their country. The decision is largely influenced by the personal bias of SEC Chairman Gary Gensler, who strongly believes that digital assets other than Bitcoin should be classified as securities.

Even though Gemini has SOC I Type 2 and SOC II Type 2 security certificates to operate as a trustworthy custodian, the SEC doesn't seem to care. Gemini has even passed audit checks confirming that their clients' digital assets are stored separately, but this doesn't seem to satisfy fiscal authorities either. Despite all of these measures, the regulators are still not pleased with Gemini's operations. 

The issue here is that the SEC has not yet clearly defined which digital assets are considered securities. So, to avoid any mistakes with cryptocurrency, they're accusing all platforms of trading securities. 

The regulation of crypto in the US is confusing and illogical. Even though there aren't any clear rules, regulatory authorities are still imposing fines, lawsuits, and bans on digital assets.

In June 2022, the CFTC sued Gemini, claiming that its founders, Cameron and Tyler Winklevoss, provided an incorrect spot price for Bitcoin in documents for futures trading way back in 2017. The lawsuit was filed five years after the permit was issued, which both the exchange's lawyers and the crypto community saw as blatant harassment by the regulator. 

In January 2023, Gemini was accused of unlawful trading of securities through its Gemini Earn program. However, the lawsuit was filed after the lending program was closed, and the funds were returned to users.

Following these events, Gemini Trust started looking into foreign markets and has already filed registration documents in Canada and India.

So, the major players in the crypto world are leaving the US.

1. Last week, Coinbase got a license to open an indefinite futures exchange in Bermuda. This happened after the company received a Wells notice for its staking services. However, as a final act of defiance, Brian Armstrong decided to sue the SEC for failing to establish clear rules for the digital market.

2. In late March 2023, Bittrex announced that doing business in uncertain conditions doesn't make sense, so the company is leaving the US. All funds belonging to American clients must be withdrawn from the platform by April 30th. But the SEC is determined to hold Bittrex and its CEO, Bill Shihara, accountable for offering securities without registering with the SEC and has filed a lawsuit against them.

3. After paying a $30 million fine for providing staking services, Kraken seems to be looking for a more lenient jurisdiction. According to CEO Dave Ripley, despite the pressure, the exchange will not register with the SEC.

If things continue on this negative trajectory, by the end of 2023, Binance US may be the only major player left in the American market. Of course, this is assuming that Changpeng Zhao can refute the charges brought against him by the Commodity Futures Trading Commission (CFTC) in court.