Judge Rejects CFTC and Gemini's Bid to Undo $5 Million Settlement
Federal judge upholds Gemini's $5 million CFTC settlement
A US federal judge has rejected a joint request by crypto exchange Gemini and the Commodity Futures Trading Commission (CFTC) to overturn a $5 million settlement from January 2025, despite the regulator saying it would not have pursued the case under its current enforcement standards.
US District Judge Alvin Hellerstein ruled on Thursday that changes in CFTC enforcement priorities and allegations of misconduct by the agency's enforcement division did not justify undoing the settlement.
Gemini has already paid the $5 million penalty, which the CFTC previously said would not be refunded even if the settlement were overturned.
What the case was about
The original case centered on how Gemini operated its Bitcoin auction. According to the January 2025 consent order, the exchange failed to disclose that some customers traded using borrowed funds, that self-trading had occurred despite safeguards, and that certain traders received special fee arrangements. Gemini also submitted trading volume data without disclosing that some activity involved these practices.
The ruling leaves intact a permanent injunction barring Gemini from making false or misleading statements to the CFTC. The settlement also prohibits Gemini from publicly denying its findings, although the regulator said in June it would no longer enforce that restriction.
Why Gemini and the CFTC wanted it overturned
On May 27, the CFTC and Gemini jointly asked the court to overturn the settlement after an internal agency review found alleged misconduct by the regulator's enforcement division. The concerns included reliance on a questionable whistleblower, improper regulatory pressure, and efforts to prevent the disclosure of evidence.
Former CFTC Chair Timothy Massad called the regulator's move to reverse a settled case "extraordinarily unusual" and told Cointelegraph that the public "deserves a better explanation."
The judge's reasoning
Hellerstein said Gemini was already aware of problems with the CFTC's case when it agreed to settle, less than three weeks before trial. Although the exchange later obtained additional internal CFTC documents, the judge ruled that the new information was not enough to overturn a settlement Gemini had voluntarily accepted.
The judge also rejected the argument that President Donald Trump's digital asset executive order and the regulator's new enforcement approach warranted relief, saying they reflected changes in policy rather than a significant change in law.
What remains in effect
The permanent injunction against Gemini making false or misleading statements to the CFTC remains active. The $5 million penalty has already been paid and will not be returned.
Sources
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