A U.S. federal judge has refused to undo the settlement between crypto exchange Gemini and the Commodity Futures Trading Commission, despite both sides asking for that result. In an order filed October 15 in the Southern District of New York, Judge Alvin Hellerstein denied their joint motion to vacate a January 2025 consent order. Gemini has paid the $5 million civil penalty, while the order’s continuing restrictions remain in force.

Why the parties sought to reopen the case

The underlying CFTC case concerned statements Gemini made during a 2017 review of a proposed bitcoin futures contract. The agency sued in 2022, alleging that some of those statements were false or misleading. Gemini disputed the case and settled shortly before a scheduled trial, without admitting or denying the allegations. The resulting consent order imposed the monetary penalty and barred Gemini from making false or misleading statements or omissions to the CFTC. It also restricted public denial of the order’s findings.

Related reporting: Blockchain Association names Kristin Smith interim CEO

The regulator reversed its assessment this year. In a May 27 statement, the CFTC said its internal review concluded that the complaint should not have been filed under its current enforcement standards. It raised concerns about a whistleblower’s credibility, the strength of the evidence and its own handling of the investigation. The agency and Gemini then asked the court for relief from the judgment, targeting the provisions that still operate prospectively. They agreed that the already-paid $5 million would not be refunded. The CFTC’s new position was its own assessment, not a judicial finding that Gemini had been cleared of the original allegations.

What the judge decided

Hellerstein held that a change in a regulator’s view of an old case did not, by itself, justify reopening a final consent judgment. The information cited by the parties concerned events that predated the settlement, he wrote; learning more about those events afterward did not turn them into a new factual circumstance arising after judgment. The judge also said the CFTC’s present view that the suit should not have been brought was insufficient grounds for vacatur under the rule the parties invoked.

The court separately rejected Gemini’s argument that regulatory pressure made its agreement involuntary. The order noted that Gemini had litigated for roughly three years, knew of issues relating to a former executive and made a decision to settle near trial. Hellerstein described the later request as dissatisfaction with a bargain, not proof that the court had imposed one without genuine consent. His decision does not retry the original allegations or make a fresh finding of liability on their merits.

Why it matters

The ruling illustrates a limit on policy reversals in U.S. crypto enforcement. An agency can change its priorities and even join a company in seeking to lift an earlier order, but a court still applies the legal standard for disturbing a final judgment. For Gemini, the immediate consequence is that the injunction and the consent order’s other continuing terms stay in place; the paid penalty is not an additional payment now due. For other firms, the case underscores the durable legal effects of settling an enforcement action.

It remains possible for parties to seek further review, but the October 15 order itself leaves the settlement intact. CoinDesk and The Block each reported the decision on October 16 and linked to the court filing. The central distinction is between the CFTC’s May decision that it no longer supports the case and the court’s later decision that this change did not satisfy the test for undoing the signed judgment.

Sources

AI-generated editorial image; not a photograph of the reported event. Prepared with AI assistance and source verification.