Judge tells Gemini and the CFTC no: the $5 million settlement both sides wanted erased stays on the books

A federal judge has refused to let the CFTC undo its own case. Judge Alvin Hellerstein of the Southern District of New York on Thursday denied a motion filed jointly by the agency and Gemini Trust Company to vacate the consent order the two signed in January 2025, The Block reported. That order ended a lawsuit the CFTC brought in 2022, which accused Gemini of making false or misleading statements to staff reviewing a proposed bitcoin futures contract. Gemini paid a $5 million civil penalty and accepted a permanent injunction, three weeks before trial.

The unusual part is that the regulator switched sides. On May 27 the CFTC announced it had joined Gemini's motion after a comprehensive review concluded the complaint should not have been filed and would not be brought under current standards. The agency cited reliance on a whistleblower of questionable credibility, the pursuit of a company it now calls a fraud victim, and evidence withheld from a commissioner before the vote. Gemini argued it had settled under coercive pressure.

Hellerstein was unmoved. The facts were known before the settlement, he wrote, so they were not post-judgment developments, and the CFTC's new assessment "does not require vacatur or other relief." Gemini had litigated for about three years and knew of internal problems, including a fraud scheme involving its former chief operating officer, before choosing to settle. He also rejected the argument that President Trump's digital-asset executive order and the CFTC's new enforcement approach amounted to a change in law, Cointelegraph reported.

The penalty stays paid and the injunction stays in force. Former CFTC chair Timothy Massad told Cointelegraph that an agency trying to reverse a case it had settled was highly irregular, and that the public deserved a better explanation. Neither Gemini nor the CFTC had commented by publication.