A US federal judge has refused to overturn Gemini's $5 million settlement with the Commodity Futures Trading Commission, rejecting a joint request from the exchange and the regulator to vacate the January 2025 consent order.

On Thursday, US District Judge Alvin Hellerstein of the Southern District of New York ruled that changes in CFTC enforcement priorities and allegations of misconduct within the agency's enforcement division did not justify unwinding a settlement Gemini had voluntarily accepted. The CFTC itself concluded it would not have pursued the case under its current enforcement standards — and the court still declined to act.

The decision preserves a permanent injunction barring Gemini from making false or misleading statements to the CFTC. The settlement also prohibits the exchange from publicly denying the regulator's findings, although the CFTC stated in June that it would no longer enforce that restriction. The $5 million penalty has already been paid, and the CFTC previously told Cointelegraph the funds would not be refunded even if the settlement had been overturned.

What triggered the reversal attempt?

On May 27, the CFTC and Gemini jointly petitioned the court to vacate the settlement. An internal agency review had surfaced alleged misconduct by the CFTC's own enforcement division, including:

• reliance on a questionable whistleblower;
• improper regulatory pressure;
• efforts to prevent the disclosure of evidence.

Hellerstein was unmoved. He noted that Gemini agreed to settle less than three weeks before trial, already aware of problems with the CFTC's case. Internal CFTC documents the exchange obtained later did not, in his view, suffice to overturn a consent order the company had accepted voluntarily. The judge also dismissed the argument that President Donald Trump's digital asset executive order and the regulator's revised enforcement approach warranted relief, writing that they reflected changes in policy rather than a significant change in law.

What was the underlying case about?

The enforcement action concerned Gemini's Bitcoin auction. Under the January 2025 consent order, the exchange failed to disclose that some customers traded using borrowed funds, that self-trading occurred despite safeguards, and that certain traders received special fee arrangements. Gemini also submitted trading volume data without disclosing that some of that activity involved these practices.

Former CFTC Chair Timothy Massad had called the regulator's attempt to reverse a settled case "extraordinarily unusual," telling Cointelegraph the public "deserves a better explanation." The court has now effectively answered that the explanation, however compelling, does not meet the legal threshold for vacating a final consent order.

What does this change for practitioners?

The ruling establishes that a shift in agency enforcement posture — even one acknowledged by the agency itself — does not reopen settled matters absent a significant change in law. Firms that voluntarily entered consent decrees under the prior regulatory regime cannot count on a change in administration or internal misconduct findings to unwind them. The $5 million penalty, roughly what a mid-sized derivatives firm might spend on a single quarter of compliance remediation, remains spent with no refund mechanism.

The decision also narrows the practical effect of the CFTC's June posture on the non-denial clause: the restriction stays on paper even where enforcement discretion relaxes. For exchanges still operating under legacy consent orders, the operative question is whether any future relief must come from appellate review rather than joint motions — a materially higher bar.