A U.S. federal judge has refused a joint request from the Commodity Futures Trading Commission and crypto exchange Gemini to undo a court-approved settlement reached earlier this year. The Oct. 15 decision leaves in place both Gemini’s $5 million civil penalty, which has already been paid, and a permanent injunction tied to the case.
The unusual request came after the CFTC reversed course on its own enforcement action and concluded the lawsuit should not have been filed. Even so, Judge Alvin Hellerstein found that the later change in the agency’s view was not enough to erase a voluntary settlement entered after years of litigation.
A rare attempt to unwind a completed case
The dispute reached an unusual stage in May 2026, when the CFTC joined Gemini in asking the court to vacate the January 2025 settlement. Both sides wanted the order set aside even though the case had already ended through a negotiated resolution approved by the court.
According to the filing described in the source report, the agency’s internal review led it to conclude that the 2022 lawsuit should never have been brought. Gemini supported that effort and said it had agreed to settle under pressure from mounting legal costs and an approaching trial.
Gemini also agreed that the government could keep the $5 million penalty even if the settlement order were erased, underscoring that the central issue was not repayment but removal of the judgment and injunction.
How the case began
The enforcement action stemmed from Gemini’s role in a proposed bitcoin futures contract in 2017. Regulators alleged that the company misled the CFTC about trading protections, customer financing, special fee arrangements and activity that could affect the contract’s pricing.
The CFTC formally sued in June 2022. Gemini later settled in January 2025 without admitting or denying the allegations. As part of that agreement, the exchange accepted a $5 million penalty and a permanent injunction barring it from misleading the agency.
Why the judge said no
Hellerstein rejected the joint request on Oct. 15, holding that the settlement should remain intact despite the CFTC’s changed position. The judge pointed to the fact that many of the concerns later raised by the agency were based on circumstances that existed before the parties agreed to settle.
The court was also not persuaded by arguments tied to shifting enforcement priorities under a new administration. In the judge’s view, that kind of policy change did not justify undoing a binding court order that both sides had voluntarily accepted after years of litigation.
What remains in effect
The immediate result is that Gemini does not recover the $5 million it paid, and the permanent injunction remains in force. While the CFTC may still exercise discretion in how it enforces that order, the underlying judgment has not been wiped away.
The ruling closes the door, at least for now, on an uncommon attempt by a regulator and a defendant to jointly erase a completed enforcement settlement after the government reconsidered the merits of its own case.
Source: news.bitcoin.com