Judge Rejects CFTC's Motion to Overturn $5 Million Settlement

The judge ruled that changes in the CFTC's enforcement priorities and allegations of misconduct by its enforcement division were not enough to overturn the January 2025 Gemini agreement.

A US federal judge has rejected a joint request by cryptocurrency exchange Gemini and the Commodity Futures Trading Commission (CFTC) to overturn a $5 million settlement, despite the regulator concluding that the case did not proceed under current enforcement standards.

On Thursday, U.S. District Judge Alvin Hellerstein ruled that changes in the CFTC's enforcement priorities and allegations of misconduct by its enforcement division did not justify voiding the January 2025 agreement.

On May 27, the CFTC and Gemini jointly asked the court to void the settlement after an internal agency review of alleged violations by the regulator's enforcement division, including reliance on a suspected whistleblower, undue regulatory pressure and efforts to prevent disclosure of evidence.

The ruling leaves intact a permanent injunction barring Gemini from making false or misleading statements to the CFTC. The agreement also bars Gemini from publicly denying its findings, although the regulator said in June it would no longer impose such restrictions.

Gemini has already paid a $5 million fine that the CFTC previously told Cointelegraph would not be refunded even if the settlement was canceled.

The case focused on how the Gemini Bitcoin auction was run. According to the January 2025 consent order, the exchange failed to disclose that some clients traded using borrowed funds, that personal trading occurred despite safeguards, and that certain traders received special fee arrangements.

Gemini also posted trading volume data without disclosing that some of the activity involved these practices.

Hellerstein said Gemini was aware of the problems with the CFTC case when it agreed less than three weeks before the trial. Although the exchange later obtained additional internal CFTC documents, a judge ruled that the new information was not enough to void the settlement that Gemini had voluntarily accepted.

The judge also rejected arguments that President Donald Trump's digital asset executive order and the regulator's new enforcement approach would give them relief, saying they reflected changes in policy rather than a significant change in the law.

Former CFTC chairman Timothy Massad previously called the regulator's move to reverse a settled case "highly unusual" and told Cointelegraph that the public "deserves a better explanation."