Judge Rejects Joint CFTC and Gemini Bid to Scrap $5m Settlement

A federal judge in New York has refused to set aside a $5m settlement between crypto exchange Gemini and the Commodity Futures Trading Commission. He turned down the request even though the regulator had joined Gemini in asking for the deal to be thrown out.

In a ruling issued on 15 October, Judge Alvin Hellerstein, who sits on the federal bench in Manhattan's Southern District, rejected the parties' joint motion to vacate the consent order, Decrypt reported. The order, which Gemini agreed to in January 2025, therefore remains in force.

What the court decided

The exchange, founded by the Winklevoss twins, and the CFTC had together argued that the settlement should be undone. They relied on two broad grounds: a change in the agency's enforcement priorities under the current administration, and allegations of misconduct within the CFTC's enforcement division.

Hellerstein concluded that the arguments fell short of the legal standard required before a court will revisit a judgment that has already been signed. In his view, the two justifications offered could not, either of them, justify unwinding the deal.

The judge also pointed out that Gemini entered the agreement voluntarily, roughly three weeks before the case was due to go to trial. That detail matters. Courts generally treat a consent order as a negotiated outcome that both sides accepted with full knowledge of the risks, rather than a ruling imposed on an unwilling party.

How the dispute began

The case has its origins in 2022, when the regulator accused Gemini of giving it false or misleading information about a bitcoin futures product the exchange had proposed. The allegations concerned what the exchange told the regulator, rather than claims of harm to customers in the market.

The two sides settled for $5m in early 2025. In May, they surprised observers by filing jointly to have the settlement vacated, arguing that the original enforcement action had breached principles of fair enforcement.

The joint nature of the request was the unusual part. In most attempts to unwind a judgment, one party seeks relief and the other opposes it. Here the regulator that brought the case was effectively asking the court to help it step back from its own past work.

What remains in place

The ruling leaves intact a permanent injunction that bars Gemini from making false or misleading statements to the CFTC. It also keeps a clause that prevents the exchange from publicly denying the findings in the settlement.

According to Decrypt, the agency has said it will no longer enforce that no-denial provision. That leaves an odd position: the clause remains part of a binding court order, while the party responsible for enforcing it has signalled it will not do so.

The money itself was never really in play. Gemini has already paid the $5m penalty, and the parties had said earlier that it would not be returned even if the motion succeeded. The funds stay with the government either way.

The dispute was therefore less about cash than about the record. Vacating the order would have removed a formal finding against Gemini and freed it from the injunction's terms. Those outcomes carry reputational and compliance weight for a firm that operates under federal oversight.

Why it matters

It is unusual for a judge to refuse a regulator's attempt to walk back an enforcement case it brought itself, which makes the decision notable. Judges usually defer to agencies on enforcement discretion, such as which cases to bring and when to settle. Hellerstein drew a line between that discretion and the finality of a judgment already entered by the court.

The distinction has wider relevance. If changes in political leadership or enforcement philosophy were enough to unwind signed settlements, consent orders could lose much of their value as a lasting resolution. Defendants might also become less willing to settle, and regulators less able to rely on past outcomes.

The ruling also lands at a sensitive moment for Gemini. The exchange is expanding its CFTC-regulated business and recently won approval from the agency, now led by Mike Selig, to broaden its prediction-market and perpetual-futures products. A standing injunction about the accuracy of its statements to that same regulator is a compliance overhang that the company had hoped to remove.

A regulator in transition

The episode shows how sharply the CFTC's approach to crypto has changed. The agency has moved to accommodate the industry, including issuing no-action relief that allows crypto apps to offer regulated derivatives. It has also floated a plan to bring crypto exchanges under federal oversight.

That softer stance reflects a broader shift in Washington's attitude towards digital assets. Gemini's case shows its limits. A regulator can change its priorities, drop pending matters or decline to enforce certain provisions, but it cannot on its own rewrite a judgment that a court has already approved.

There are counterpoints. Supporters of the joint motion would argue that the original case reflected an enforcement culture the agency now regards as flawed, and that keeping the order in place preserves the results of that approach. The allegations of misconduct within the enforcement division, though they did not persuade the judge, may still raise questions about how the case was brought.

On the other side, the court's view rests on a simple point: Gemini had legal representation, knew a trial was imminent and chose to settle. On that reading, buyer's remorse, even when shared by the regulator, is not a reason to undo a judgment.

What to watch next

The ruling does not alter Gemini's day-to-day operations, since the penalty has been paid and the agency has said it will not police the no-denial clause. But the longer-term questions are unresolved.

• Whether Gemini or the CFTC pursues any further legal route to challenge the decision.
• How the remaining injunction sits alongside Gemini's expanding prediction-market and perpetual-futures business.
• Whether other firms that settled with the CFTC under earlier leadership attempt similar moves, and how courts respond.
• How the agency's plans for broader federal oversight of crypto exchanges develop.

For now, the outcome is a reminder that settlements, once signed and approved, carry a permanence that outlasts changes in policy. The CFTC may have moved on from the case, but the court has made clear that the record stands.