Judge Denies CFTC and Gemini Bid to Vacate $5M Settlement

A federal judge has denied a joint request from the Commodity Futures Trading Commission and Gemini Trust Company LLC to set aside their January 2025 consent order, leaving a $5 million civil penalty paid and a permanent injunction in force. Judge Alvin Hellerstein ruled on October 15, according to Coincentral.

The decision in CFTC v. Gemini Trust Company LLC keeps the 2025 order on the docket even though the regulator now says it would not have brought the underlying case under its current standards. Gemini’s $5 million payment was made before the exchange sought relief and will not be returned — a point neither side contested in their May motion, per Coincentral and Blockonomi.

Key facts

• Hellerstein denied the joint request on October 15, leaving the January 6, 2025 consent order in effect.
• The $5 million civil penalty had already been paid, and the parties did not seek its return.
• The permanent injunction bars Gemini from making false or misleading statements or omissions to the CFTC.
• The original CFTC lawsuit was filed in 2022 over statements made during a 2017 review of a proposed Bitcoin futures product tied to Gemini auction prices.
• The motion, filed May 27 in case 1:22-cv-04563-AKH, invoked Rule 60(b)(5) and, alternatively, Rule 60(b)(6), according to Crypto.news.

Two records, one docket

The case now carries a tension that will not resolve quickly. In May, the CFTC announced an internal review concluding the complaint should not have been filed under its current standards. The agency said the investigation relied heavily on a whistleblower whose account it now regards as unreliable, and it cited concerns including evidence allegedly withheld before a commission vote and improper regulatory pressure in settlement talks. Crypto.news reported that the CFTC’s public statement described six concerns about its own prior conduct.

Those are the agency’s conclusions about its own earlier case, not independent findings in a new trial. Hellerstein’s order, meanwhile, is a court judgment — one he declined to reopen.

The parties asked the judge to vacate the consent order or only its prospective portions. The $5 million penalty, a backward-looking element, was already transferred. The injunction, the no-denial provision regarding settlement findings, and defined evidentiary consequences in later CFTC proceedings were the forward-looking pieces at stake.

What changed — and what did not

Hellerstein found that the CFTC’s reassessment and shifts in federal crypto policy did not meet the Rule 60 threshold. Crypto.news reported that he treated the distinction between when a fact occurred and when a party learned it as central: information that existed before the judgment can be newly discovered by a litigant without becoming a new post-judgment event. Blockonomi reported his order found no sufficient basis under Federal Rule of Civil Procedure 60 to undo a judgment reached voluntarily shortly before trial.

The timing mattered to the court. Gemini settled on December 24, 2024, fewer than three weeks before the scheduled trial, after nearly three years of litigation. The judge noted the exchange had counsel and agreed to terms declaring its consent voluntary.

A November 2024 pretrial ruling, docket entry 182, denied the CFTC partial summary judgment except on whether Gemini was the maker of the alleged representations — a point Crypto.news highlighted to show the court had not issued a complete liability finding on every contested element.

Why it matters

The ruling separates an agency’s power to set future enforcement priorities from a court’s power to reopen a judgment that the same agency and defendant now both dislike. A regulator can decline to bring a similar case tomorrow or choose how aggressively to police a standing injunction, but a policy announcement does not delete a federal order. For Gemini and its affiliates, the practical result is a regulatory relationship still governed by a 2025 court order while the CFTC operates under revised enforcement policy. Any company that settled an enforcement action before a regulator changed course faces the same structural question: what legal ground, not just what new philosophy, supports reopening the order.

What to watch

An appeal docket: a notice of appeal or a later Second Circuit order concerning the October 15 denial would be the clearest path to changing the outcome. Also watch for any new district court entry modifying the January 2025 injunction or no-denial terms, and for a dated CFTC statement or proceeding about enforcing a specific prospective provision.

This article is not financial or investment advice, and crypto markets remain volatile and uncertain.

Disclaimer: This article is for information only and is not investment, financial or trading advice. Cryptocurrency prices are highly volatile. Always do your own research.

Sources: CoinCentral, Blockonomi, Crypto.news