In a major blow to the crypto exchange Gemini, a federal judge has rejected an effort by the firm and the regulator Commodity Futures Trading Commission (CFTC) to undo a settlement the two sides reached last year, leaving the crypto exchange bound by a permanent injunction and a $5 million civil penalty.
The ruling by the US District Judge Alvin K Hellerstein, of the Southern District of New York, on October 15 came after both parties jointly asked the court on May 27 to throw out the January 2025 settlement. Their request followed an internal CFTC review that uncovered alleged misconduct within the agency’s enforcement division, including reliance on a questionable whistleblower, improper pressure during the regulatory process, and attempts to withhold evidence from disclosure.
Gemini and the CFTC argued in May that the original settlement had “violated bedrock principles of fair enforcement.” The agency also pointed to internal findings of inappropriate litigation tactics and suggested the case would likely never have been brought under the current, more crypto-friendly Trump administration.
In the ruling, the judge wrote that “neither of these arguments provide sufficient grounds for relief,” pointing out that Gemini had agreed to the settlement voluntarily, just three weeks before the case was set to go to trial.
The judge gave weight to the fact that Gemini had spent nearly three years fighting the CFTC’s allegations before ultimately accepting the deal. He found that later disclosures about how the agency handled its investigation, while potentially troubling, did not change the fact that Gemini had already committed to the settlement before those materials came to light.
Hellerstein acknowledged the new information might have influenced Gemini’s decision had it been available earlier, but concluded that second thoughts about a prior agreement do not amount to the kind of changed circumstances needed to justify undoing enforcement after the fact. Further, he similarly dismissed the argument that Trump’s digital asset executive order and the CFTC’s shifting enforcement posture warranted relief, characterizing those developments as policy changes rather than meaningful changes in law.
Under the ruling, Gemini remains subject to a permanent injunction barring the company from making false or misleading statements to the CFTC. The settlement also bars Gemini from publicly disputing the agency’s findings, though the CFTC indicated in June that it no longer intends to enforce that particular restriction.
According to the January 2025 consent order, the exchange did not disclose that certain customers had traded using borrowed funds, that self-trading occurred despite safeguards meant to prevent it, and that some traders received special fee arrangements. Gemini also submitted trading volume figures without revealing that a portion of the activity involved these practices.
