A U.S. federal judge has denied a bid by crypto exchange Gemini and the Commodity Futures Trading Commission (CFTC) to undo a $5 million settlement, even after the regulator concluded that it likely would not have pursued the case under its current enforcement approach. The ruling means the settlement terms—most notably a permanent injunction aimed at misleading statements—remain in place.
On Thursday, U.S. District Judge Alvin Hellerstein rejected arguments that shifting CFTC enforcement priorities and internal allegations of misconduct within the agency’s enforcement staff justify overturning the January 2025 deal. The dispute began after Gemini and the CFTC jointly asked the court to revisit the settlement following an internal agency review.
Key takeaways
- Judge Alvin Hellerstein refused to overturn Gemini’s January 2025 $5 million CFTC settlement despite the agency’s internal review.
- The decision leaves intact a permanent injunction barring Gemini from making false or misleading statements to the CFTC.
- Gemini has already paid the $5 million penalty, and the CFTC previously indicated it would not be refunded if the settlement were reversed.
- The court said Gemini’s new internal document arguments did not outweigh the exchange’s decision to settle before trial.
Court rejects bid to unwind the settlement
Gemini and the CFTC jointly filed to reverse the settlement after a CFTC internal review, described in the request, raised claims about enforcement conduct. According to the court filings summarized in earlier reporting by Cointelegraph, the review alleged issues including reliance on a questionable whistleblower, improper regulatory pressure, and efforts to prevent disclosure of evidence.
Despite those findings, Judge Hellerstein concluded that the new circumstances did not meet the standard needed to overturn a settlement that Gemini agreed to voluntarily. In his ruling, the judge also determined that changes in the CFTC’s enforcement posture were more a matter of policy than a legally significant shift that would justify reopening the agreement.
In practical terms, the settlement survives. That includes a permanent injunction restricting Gemini from making false or misleading statements to the CFTC. The settlement also included limits on Gemini’s public statements denying the CFTC’s findings; however, the CFTC stated in June that it would no longer enforce those restrictions.
What the January 2025 consent order alleged
The dispute focused on how Gemini operated a Bitcoin auction. As stated in the January 2025 consent order, the exchange allegedly failed to disclose certain details about trading activity and related arrangements.
Specifically, the order said Gemini did not disclose that some customers traded using borrowed funds. It also alleged that self-trading occurred despite safeguards Gemini had in place, and that some traders received special fee arrangements. The consent order further described Gemini submitting trading volume data without disclosing that some of the volume involved these practices.
While those allegations were settled rather than litigated, Judge Hellerstein emphasized that Gemini was aware of problems with the CFTC’s case when it chose to settle. The judge noted that Gemini agreed to the settlement less than three weeks before a scheduled trial date.
Why the judge said new materials weren’t enough
In seeking relief, Gemini and the CFTC argued that they should be allowed to revisit the settlement in light of internal documents and allegations arising from the agency’s review process. Judge Hellerstein acknowledged that Gemini later obtained additional internal CFTC materials, but he ruled that the newly produced information was not sufficient to overturn a settlement that Gemini had already accepted.
The judge’s reasoning underscored a key threshold issue for parties trying to unwind negotiated resolutions: even if developments raise concerns about how a regulator handled a matter, courts typically expect a strong showing that the settlement should be set aside under applicable legal standards.
He also rejected Gemini’s argument that President Donald Trump’s digital asset executive order and the CFTC’s subsequent enforcement approach created a basis to reopen the case. In the ruling, Hellerstein characterized those developments as changes in policy rather than a significant change in law.
Broader implications for enforcement and settlements
The ruling lands at a time when crypto market participants are closely watching how U.S. regulators handle enforcement, especially where consent orders and negotiated settlements are concerned. Although the CFTC’s internal review concluded that it would not have pursued the case under current standards, the court still declined to unwind the agreement—suggesting that internal critiques, by themselves, may not be enough to undo finalized settlements.
For compliance teams at regulated crypto firms, the decision highlights the practical risk of settling disputes even when a regulator’s stance may evolve later. Gemini’s settlement acceptance—made just weeks before trial—became central to the judge’s assessment, limiting the impact of later findings about enforcement conduct.
The decision also preserves the injunctive relief framework that accompanies many regulatory settlements. Even where other parts of enforcement restrictions may become unenforced over time—such as the CFTC’s decision in June to stop enforcing certain public-statement constraints—the core prohibition on false or misleading statements remains.
Meanwhile, the legal debate around the CFTC’s use of enforcement resolutions in crypto continues. Cointelegraph previously reported that former CFTC Chair Timothy Massad criticized the regulator’s move to reverse a settled case as “extraordinarily unusual,” arguing that the public deserved a better explanation.
What happens next
With the settlement intact, Gemini’s immediate legal exposure is reduced, but the episode leaves an enduring question for the industry: how courts will weigh internal regulator reviews and shifting enforcement priorities against the finality of consent orders. Readers should watch for how regulators handle future requests to revisit settlements—and whether similar internal-agency findings will meet the standards courts require to reopen past cases.
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