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, despite the regulator’s conclusion that it would not have pursued the case under current enforcement standards.
On Thursday, US District Judge Alvin Hellerstein ruled that changes in CFTC enforcement priorities and allegations of misconduct by its enforcement division did not justify overturning the January 2025 settlement.
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, including reliance on a questionable whistleblower, improper regulatory pressure and efforts to prevent the disclosure of evidence.
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 that it would no longer enforce such restrictions.
Gemini has already paid the $5 million penalty, which the CFTC previously told Cointelegraph would not be refunded even if the settlement were overturned.
Judge cites Gemini’s decision to settle before trial
The 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 of the activity involved these practices.
Related: Better Markets says CFTC is ‘wrong agency’ to regulate retail crypto
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.
Former CFTC Chair Timothy Massad previously called the regulator’s move to reverse a settled case “extraordinarily unusual,” telling Cointelegraph that the public “deserves a better explanation.”
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