Judge Rejects Gemini and CFTC Request to Overturn $5 Million Settlement
A U.S. federal judge has rejected a joint request by cryptocurrency exchange Gemini and the Commodity Futures Trading Commission (CFTC) to overturn their January 2025 settlement, leaving the agreement's permanent injunction and other restrictions in place.
U.S. District Judge Alvin K. Hellerstein issued the decision on October 15 in the case CFTC v. Gemini Trust Company, No. 1:22-cv-04563, in the Southern District of New York. The ruling means Gemini remains subject to court-ordered restrictions concerning statements and omissions made to the regulator.
The exchange has already paid the $5 million civil penalty established in the January 6, 2025, consent order. Hellerstein noted that the parties had agreed the payment would not be returned to Gemini.
Judge Rejects Arguments for Reopening Gemini Settlement
Gemini and the CFTC submitted an amended motion on May 28 seeking to vacate the consent order under Federal Rule of Civil Procedure 60(b)(5), or alternatively remove its prospective provisions under Rule 60(b)(6).
The CFTC argued that a subsequent review had identified weaknesses in the evidence and inappropriate enforcement tactics. The agency also said the original complaint should not have been filed under its current enforcement standards.
Hellerstein concluded that the CFTC's updated approach, including policies adopted following President Donald Trump's digital-assets executive order, reflected changing enforcement priorities rather than a significant change in the law that justified reopening the judgment.
The judge also found that internal materials obtained after the settlement concerned facts that existed when Gemini agreed to resolve the case. Learning about those facts later did not, by itself, establish changed circumstances. The parties also failed to demonstrate how the later disclosure had prejudiced them, he wrote.
Permanent Injunction and Restrictions Remain in Effect
The court rejected the parties' alternative request under Rule 60(b)(6). Hellerstein explained that arguments based on newly discovered evidence or misconduct fall under other provisions with a one-year filing deadline. The catchall provision could not be used to circumvent that time limit.
He also dismissed the argument that regulatory pressure had made Gemini's agreement involuntary. The judge noted that Gemini was represented by counsel and had expressly agreed to settle voluntarily.
Under the consent order, Gemini remains permanently prohibited from making false or misleading statements to the CFTC or omitting material facts. The exchange is also bound by an agreement not to publicly deny the complaint's allegations or the settlement's findings.
Case Stemmed From Bitcoin Futures Review in 2017
The original enforcement case concerned statements and omissions made between approximately July and December 2017 while the CFTC was reviewing a proposed Bitcoin futures contract. The contract would have settled against a price determined by Gemini's auction, making the auction's vulnerability to manipulation relevant to the regulator's assessment.
The settlement identified misleading statements or omissions involving trading prefunding, safeguards against self-trading, fee rebates and trading volume. Gemini entered the agreement without admitting or denying the allegations or findings, except regarding jurisdiction and venue.
Hellerstein directed the court clerk to terminate the two motions. He also noted that the CFTC remains free to consider its current policies when deciding whether to pursue enforcement of the consent order.
source: thedefiant
Writer: Ethan Collins
Crypto Journalist
Ethan Collins reports on developments across the cryptocurrency and blockchain sector. His work covers market movements, protocol updates, regulatory changes, and emerging trends in digital assets.
He focuses on presenting complex topics in a clear and accessible manner for a broad readership.
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