A federal judge has declined to unwind Gemini’s $5 million settlement with the Commodity Futures Trading Commission, turning down an unusual joint request from the exchange and the regulator to erase it. Judge Alvin K. Hellerstein of the Southern District of New York denied the motion on October 15, 2026, leaving the civil penalty and a permanent injunction in place.
The posture was itself notable. The agency that brought the case in 2022 stood beside the defendant and asked the court to undo its own result. That makes the ruling one of the clearest tests so far of whether crypto firms can unwind enforcement actions that began under the previous administration simply because the agency’s priorities have shifted.
The dispute reaches back to a 2017 review of a proposed bitcoin futures contract that would have settled against an auction price set on Gemini’s own exchange. The CFTC alleged that Gemini made false or misleading statements about prefunding, self-trading, fee rebates, and reported trading volume during that review. The consent order, entered in January 2025 about three weeks before a scheduled trial, imposed the $5 million penalty — which has already been paid — and barred the exchange from making false or misleading statements to the commission. Gemini neither admitted nor denied the allegations.
The joint motion, filed in May 2026 under Federal Rule of Civil Procedure 60, rested on two arguments: that the CFTC’s post-settlement review revealed inappropriate tactics during the litigation, and that the agency would not have filed the case under its current enforcement approach. Hellerstein rejected both.
The core of the ruling is a distinction that will travel beyond this case. A change in enforcement priorities — the January 2025 executive order on digital assets, a Justice Department memorandum, and the commission’s new posture — is a change in policy, not a significant change in law, the judge wrote. Newly acquired knowledge of facts that existed when the consent order was entered is likewise not a change in factual circumstances. Under the standards courts apply to modifying consent decrees, neither is enough to reopen a final judgment.
The coercion argument fared no better. Gemini litigated for roughly three years with counsel and settled deliberately shortly before trial. In the court’s view, that was a free, calculated, and deliberate choice — the kind courts do not lightly unwind. The judge also noted that the catch-all provision the parties invoked cannot be used to sidestep the one-year deadlines that apply to newly discovered evidence or alleged misconduct.
What the order does not do matters as much as what it does. It does not reopen the merits of the 2017 statements; it decides only whether the settlement itself could be set aside. And it does not bar the CFTC from changing course going forward — the commission retains discretion over its enforcement priorities. The practical signal is that a regulator’s change of heart is not, by itself, a reason to erase a final order.
The ruling leaves the penalty paid and the injunction in force. Neither side has said publicly whether it will appeal.
Source: BlockchainReporter.