The Winklevoss twins are teaming up with Nasdaq to sniff out bad actors on their cryptocurrency exchange

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Entrepeneurs Tyler and Cameron Winklevoss arrive at the Met Gala in New York

• The Winklevoss twins are teaming up with Nasdaq, the exchange operator, to catch crypto criminals on its exchange.
• Gemini will use Nasdaq's SMARTS surveillance technology to monitor the exchange venue.

Gemini, the cryptocurrency exchange founded by the Winklevoss twins, is going to use Nasdaq's surveillance technology to sniff out nefarious activity on its trading venue.

The cryptocurrency exchange announced the deal with Nasdaq on Wednesday. As part of the deal, Gemini will use Nasdaq's SMARTS, a surveillance technology used across Wall Street, to identify unusual and potentially criminal trading behavior on its venue. The news comes amid a crackdown by regulators, concerned about manipulation and fraud in the Wild West world of cryptocurrencies.

"Since launch, Gemini has aggressively pursued comprehensive compliance and surveillance programs, which we believe betters our exchange and the cryptocurrency industry as a whole," Tyler Winklevoss, chief executive of Gemini, said in a statement. "Our deployment of Nasdaq's SMARTS Market Surveillance will help ensure that Gemini is a rules-based marketplace for all market participants."

Regulators have been looking at the the crypto exchange space with more scrutiny. Recently New York Attorney General Eric Schneiderman's office sent out an inquiry to a number of cryptocurrency exchanges, including Gemini, requesting information about market manipulation and exchange outages. At the Securities and Exchange Commission, regulators are looking into whether certain digital currencies - including ether - can be deemed a security, people familiar with the situation told Business Insider.

Market manipulation in crypto has long been a concern. An academic paper in the Journal of Monetary Economics found a bitcoin trader was able to manipulate the bitcoin in 2013 on the Mt. Gox Exchange, thereby driving the price up by more than $1,000. As noted by Business Insider's Oscar Williams-Grut, pump and dump schemes are commonplace.

This isn't the first time Gemini has partnered with a well-established exchange. Notably, it tried to get an exchange-traded fund for bitcoin off the ground with Bats, the exchange venue acquired by Cboe last year. Gemini also partnered with Cboe on its bitcoin futures product.

As for Nasdaq, it is preparing its own bitcoin futures product, which is not expected to go live until the second half of 2018.