NEW YORK — A joint filing in the Gemini case this year described the exchange as “the victim of a sophisticated fraud scheme enabled by its own Chief Operating Officer.” On Thursday a federal judge used that line against it, ruling that Gemini knew as much as early as August 2017 and still chose to settle with its eyes open.
U.S. District Judge Alvin K. Hellerstein’s order, dated October 15, denied a joint request from Gemini and the Commodity Futures Trading Commission to vacate the consent order that fined the exchange $5 million in January 2025. The agency that sued Gemini in 2022 now says the case should not have been brought. The judge was not persuaded that a change of heart is a change in the law.
The ruling answers a question the CFTC raised: can an agency that changes its mind about a settled case ask a court to treat the deal as if it never happened? Not on these grounds, Hellerstein wrote. Gemini has paid the penalty, which under the parties’ own May agreement will not be returned, and the permanent injunction against misleading the regulator stays in force.
The case began over what Gemini told CFTC staff during a 2017 review of a proposed bitcoin futures contract. The consent order found its representatives made statements they “reasonably should have known were false or misleading” about prefunding, self-trading, fee rebates and trading volume, the order recounts. Gemini neither admitted nor denied the allegations.
Gemini argued that regulators coerced the December 2024 settlement, reached fewer than three weeks before trial. Hellerstein disagreed. Represented by counsel through more than three years of litigation, Gemini made, in words he borrowed from the Supreme Court, a “free, calculated, [and] deliberate choice.” Later access to additional CFTC materials “may have caused it to regret that it settled,” he wrote, but did not amount to a change in circumstances.
The political argument fared worse. The parties had leaned on President Donald Trump’s January 2025 executive order on digital assets and the CFTC’s new enforcement posture. The judge called those “a change in enforcement priorities and policies, not a ‘significant change … in law.'” CFTC Chairman Michael Selig blamed the Biden administration in June, saying “They politically targeted people like the Winklevoss twins,” Cointelegraph reported.
Timothy Massad, a former CFTC chair, called the attempt to reverse a settled case “extraordinarily unusual.” Congress has not settled which agency polices crypto, either. The Senate failed to advance the CLARITY Act in September, according to Cointelegraph, leaving the CFTC’s and SEC’s roles unresolved.
The CFTC said in June that it would no longer enforce the clause barring Gemini from denying the findings, Cointelegraph reported, and the judge left the agency free to weigh its current priorities in deciding whether to enforce the order. Whether either side will appeal is not known.
