CFTC Aligns With SEC by Repealing No-Deny Policy

TLDR

• The CFTC rescinded its long-standing no-deny settlement policy that dated back to 1998.
• The agency said the rule may have created the impression that it was shielding itself from criticism.
• CFTC Chairman Mike Selig stated that the repeal aligns the commission with other federal regulators.
• The commission confirmed it will not newly enforce no-deny clauses in existing settlement agreements.
• The CFTC also moved to vacate its $5 million settlement with crypto exchange Gemini.

The US Commodity Futures Trading Commission has repealed its long-standing no-deny settlement policy. The change allows defendants to settle cases without promising silence about agency allegations. The decision follows a similar move by the Securities and Exchange Commission in May.

CFTC Removes Decades-old No-deny Requirement

The CFTC said it adopted the no-deny policy in 1998 and enforced it for nearly three decades. The rule barred defendants from settling cases if they publicly denied the agency’s allegations. However, the commission now says the policy created a mistaken impression about its motives.

CFTC Chairman Mike Selig announced the repeal in a public statement on Wednesday. He said the commission refused settlements unless defendants agreed not to deny allegations. “I am pleased that we are rescinding the no-deny policy consistent with regulators throughout the government,” Selig said.

The agency stated that the rule may have suggested it sought to shield itself from criticism. Therefore, it decided to align its practices with other federal regulators. The SEC rescinded a similar policy in May using comparable language.

The CFTC said the repeal gives it more flexibility in resolving enforcement actions. It clarified that it will not newly enforce no-deny clauses in existing agreements. However, it may still require some defendants to admit specific facts or liabilities.

Crypto firms previously criticized the policy as a limit on free speech. They argued that settlements restricted their ability to contest allegations publicly. The repeal addresses those concerns while preserving enforcement authority.

Regulatory Review and Gemini Settlement Reversal

Under the Trump administration, regulators have reviewed actions filed during the Biden administration. The CFTC and the SEC have reconsidered several crypto-related enforcement cases. The agencies have rolled back certain proceedings as part of that review.

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On Thursday, the CFTC sought to vacate a $5 million settlement with Gemini. Chairman Selig described the case as “politically targeted” in public remarks. The move marked a departure from the agency’s prior position on the matter.

Tim Massad, a former CFTC chairman under Barack Obama, commented on the reversal. He told Cointelegraph that the decision was “extraordinarily unusual.” His statement highlighted the rare nature of undoing a finalized settlement.

The CFTC confirmed that it filed a motion to withdraw the Gemini settlement. The agency did not disclose further details about the case in its statement. The commission has not announced a new timeline for resolution.

The policy repeal and the Gemini motion occurred within the same week. The CFTC framed both actions as part of its broader review of enforcement practices. The agency has not issued further guidance beyond its public statements.