Judge rejects Gemini and CFTC bid to cancel $5M settlement

A federal judge in New York has refused to cancel the $5 million settlement between the exchange Gemini and the regulator CFTC, even though both sides asked for it together. Judge Alvin Hellerstein of the Southern District of New York issued the ruling on October 15.

That rarely happens. Courts usually just approve what the parties agree on, but here the judge turned down a joint request from the defendant and the plaintiff.

What the court decided

Hellerstein looked at two grounds cited by Gemini and the CFTC. The first was a shift in the agency's enforcement priorities, the second an internal review of the agency itself. The judge found that neither gives him the power to reopen a closed case.

"Neither of these two grounds is sufficient to support vacating the settlement."

- Alvin Hellerstein, US District Judge, from the ruling of October 15, 2026

The judge also rejected the argument built on Donald Trump's executive order on digital assets. In his view, the order and the CFTC's new approach to oversight reflect a change in policy, not a change in law.

How the case began

The CFTC charged Gemini back in 2022. The regulator said the exchange gave incomplete or misleading information in connection with a proposed bitcoin futures product. The sides signed the $5 million deal in January 2025, less than three weeks before trial.

According to Cointelegraph, the consent order covered trading practices at Gemini's Bitcoin auction. The exchange did not disclose that some customers traded with borrowed funds. It also failed to mention self-trading that continued despite safeguards, and special fee arrangements for certain traders. Gemini submitted trading volume data without these caveats.

Why both sides wanted it undone

They filed the joint motion on May 27. Before that, an internal CFTC review had found misconduct in the agency's enforcement division. It pointed to reliance on a questionable whistleblower, improper pressure on market participants and efforts to keep evidence from being disclosed.

In June the regulator added that it would no longer enforce the clause barring Gemini from publicly denying the settlement's findings. Former CFTC chair Timothy Massad called the attempt to reverse a settled case "extraordinarily unusual" and said the public "deserves a better explanation."

Hellerstein saw it differently. Gemini knew about the weak points in the CFTC's case before it signed, and settled anyway. Internal documents the exchange obtained later do not change that.

What stays in force

The ruling keeps two restrictions in place. Here is what that means in practice.

• The permanent ban on false and misleading statements to the CFTC remains.
• The clause barring public denial of the findings formally stays, though the regulator will not apply it.
• The $5 million already paid stays with the US government.

For Gemini this is a complication at a moment when the exchange is expanding its business under CFTC oversight. According to Decrypt, the Mike Selig-led regulator recently let it broaden prediction markets and perpetual futures.

What it says about the CFTC's course

In recent months the agency has eased pressure on the industry. It issued no-action letters for apps offering regulated derivatives and is weighing a plan for federal oversight of exchanges. The New York court showed that this softer line does not automatically reach cases that are already closed.

The market barely reacted. Bitcoin traded near $81,500 on Friday, and anyone who wants to exchange Bitcoin for dollars is watching the macro backdrop and Fed decisions first, not the legal troubles of a single exchange.