A U.S. federal judge has rejected an October 15 request by cryptocurrency exchange Gemini Trust and the Commodity Futures Trading Commission (CFTC) to cancel their $5 million settlement, leaving the previously paid penalty and permanent injunction in place.
Summary
- A federal judge rejected Gemini and CFTC’s joint request to overturn their $5 million settlement agreement.
- Gemini paid the $5 million penalty before both parties requested relief from the existing judgment.
- Judge Alvin Hellerstein ruled that alleged enforcement misconduct did not justify overturning Gemini’s previous settlement agreement.
- The CFTC concluded its original Gemini lawsuit would not meet the agency’s current enforcement standards.
- Gemini remains subject to a permanent injunction barring false or misleading statements to the federal regulator.
U.S. District Judge Alvin Hellerstein, who oversees the Gemini enforcement case in New York, ruled that neither the regulator’s allegations of improper enforcement conduct nor changes in federal cryptocurrency policy justified overturning the January 2025 agreement.
The decision followed a joint motion filed in May after the CFTC reviewed its original investigation and concluded that the lawsuit should not have been brought under its current enforcement standards.
Gemini had already paid the $5 million fine, and both parties had agreed that the company would not receive a refund if the settlement was overturned. Their request focused on removing the court’s continuing restrictions, including an injunction prohibiting Gemini from making false or misleading statements to the regulator.
Judge rejects Gemini and CFTC’s request to cancel settlement
In his October 15 ruling, Hellerstein rejected the arguments presented by the exchange and federal regulator, finding that their concerns did not meet the legal requirements for reversing an existing judgment.
The judge stated that “neither of these arguments provide sufficient grounds for relief,” referring to the alleged problems with the original enforcement process and changes in the administration’s approach to cryptocurrency regulation.
Gemini had agreed to settle the case approximately three weeks before its scheduled trial in January 2025. Hellerstein considered that decision voluntary, noting that the company had spent nearly three years contesting the regulator’s allegations before accepting the agreement.
The court found that later disclosures about the CFTC’s handling of the investigation did not establish sufficient grounds to cancel the settlement. Although Gemini argued that the information raised questions about how the case was pursued, the judge said the company had already accepted the terms before obtaining those materials.
Hellerstein acknowledged that the disclosures could have led Gemini to reconsider its decision to settle. However, he determined that regret over an earlier agreement did not establish a change in circumstances sufficient to make continued enforcement unfair.
The judge maintained that the penalty arose from the conduct addressed in the original case and rejected claims that the settlement resulted from excessive enforcement pressure. He found that Gemini’s senior officials had knowingly misrepresented material information during the regulator’s review of a proposed Bitcoin futures product.
CFTC reversed its position after reviewing Gemini investigation
The attempt to overturn the settlement began in May 2026, when the CFTC joined Gemini in seeking relief from the court order. The agency had previously pursued the case for several years before agreeing to resolve it in January 2025.
Following an internal review, the regulator announced on May 27 that its original complaint should not have been filed. The review examined the evidence used to support the charges, internal decision-making procedures, and the conduct of enforcement lawyers during litigation.
Among its findings, the CFTC questioned the reliability of the whistleblower whose account had supported much of the investigation. The agency said its personnel knew of credibility concerns but continued pursuing allegations against Gemini.
The regulator further alleged that enforcement staff had withheld relevant information from a commissioner before the vote authorizing the lawsuit. Its review identified concerns about whether Gemini had received access to materials needed to defend itself during the proceedings.
According to the CFTC, enforcement personnel had improperly used their regulatory authority to strengthen their position during settlement discussions. The agency maintained that the practices identified in its review did not meet acceptable enforcement standards.
The motion followed an earlier dispute over Gemini’s allegations of misconduct against CFTC enforcement lawyers. In June 2025, Gemini submitted a 13-page complaint to the regulator’s inspector general, criticizing how the investigation had been conducted.
In May, the parties argued that keeping the court’s remaining restrictions in force would be unfair, given the findings of the regulator’s review. Their request relied on federal rules allowing courts to modify certain judgments when continued enforcement is no longer equitable.
The CFTC’s attempt to reverse Gemini’s $5 million settlement came after the regulator had already dismissed or reconsidered several digital asset enforcement matters under the current administration.
Gemini’s $5 million fine came from a Bitcoin futures dispute
The original enforcement action began in June 2022, when the CFTC accused Gemini of providing false or misleading information during a regulatory review of a proposed Bitcoin futures contract.
Between July and December 2017, Gemini had supplied information about its trading platform and Bitcoin auction system. The proposed futures contract would have relied on auction prices generated by the exchange to determine settlement values.
According to the regulator’s original complaint, Gemini made misleading statements concerning trading volume, customer funding arrangements, and safeguards against manipulation. The agency maintained that the disputed information was relevant to its assessment of whether the futures contract could be manipulated.
Investigators examined the exchange’s auction procedures, including requirements for traders to maintain sufficient funds before entering orders. The complaint questioned whether those arrangements operated as Gemini had represented during the review.
The CFTC further alleged that certain statements concerning liquidity and trading activity did not accurately describe the exchange’s operations. Gemini disputed the regulator’s allegations throughout the proceedings and maintained that its conduct had not caused manipulation or customer losses.
Following years of litigation, the parties reached a settlement in January 2025. The regulator confirmed that Gemini agreed to pay a $5 million civil monetary penalty and comply with a permanent injunction against providing false or misleading information to the commission.
Gemini resolved the lawsuit without admitting or denying the findings in the consent order, apart from matters expressly acknowledged in the agreement. The settlement was entered shortly before President Donald Trump returned to office.
At the time, the exchange’s agreement to pay the $5 million CFTC penalty ended the lawsuit before the scheduled trial. The agreement included the financial penalty and restrictions governing Gemini’s future dealings with the regulator.
Gemini ruling follows changes in U.S. crypto enforcement
The unsuccessful motion followed changes in federal cryptocurrency enforcement after Trump began his second presidential term in January 2025. His administration adopted a more supportive policy toward digital asset businesses, while financial regulators reassessed several ongoing investigations.
In its May court filing, the CFTC cited Trump’s January 23, 2025, executive order on digital financial technology when explaining its revised position. The regulator argued that the enforcement case against Gemini did not align with its current standards or the government’s revised approach.
Gemini’s founders, Tyler and Cameron Winklevoss, have supported Trump through political donations and investments involving members of his family. Their relationship with the administration has attracted attention during the exchange’s legal disputes with federal regulators.
The founders became involved in another regulatory dispute concerning Brian Quintenz, Trump’s initial nominee to lead the CFTC. In September 2025, Quintenz claimed that the brothers had influenced the confirmation process and shared messages he said he exchanged with Tyler Winklevoss.
The White House later nominated Michael Selig to lead the regulator.
Gemini became a publicly traded company in September 2026 under Gemini Space Station Inc. The company has since expanded its business into prediction markets, allowing customers to trade contracts linked to future events.
For the October 15 ruling, neither Gemini nor the CFTC immediately issued a public response in the initial reporting. The court’s rejection leaves the January 2025 consent order in effect, including the permanent injunction restricting Gemini’s representations to the commission.
