A federal judge in New York has refused to erase the $5 million settlement that ended the Commodity Futures Trading Commission’s case against Gemini, leaving the penalty and a permanent injunction in place after the regulator itself joined the crypto exchange in asking the court to undo them.
Judge Alvin K. Hellerstein of the U.S. District Court for the Southern District of New York denied the joint motion in an eight-page order dated October 15, 2026. The consent order at issue was entered in January 2025, roughly three weeks before a scheduled trial, and required Gemini to pay a $5 million civil penalty — which it has already paid — and permanently barred the exchange from making false or misleading statements to the CFTC.
Why the CFTC Asked to Undo Its Own Case
The dispute traces to statements Gemini made during a 2017 review of a proposed bitcoin futures contract. The CFTC sued Gemini in June 2022, alleging the exchange made false or misleading statements of material fact to agency staff about prefunding, self-trading, fee rebates and trading volume. Gemini neither admitted nor denied the allegations when it settled.
On May 28, 2026, the CFTC and Gemini jointly moved to vacate the order under Federal Rule of Civil Procedure 60. The commission said the complaint should not have been filed and that continuing to enforce it served neither the CFTC’s mission nor the public interest. Gemini separately argued that it had settled under coercive regulatory pressure. The joint request was one of the clearest signals that the agency’s new leadership was re-examining crypto cases brought under the previous administration.
The Judge’s Reasoning
Hellerstein rejected both positions. “Newly acquired knowledge of facts that existed at the time the Consent Order was entered does not constitute a significant change in factual circumstances,” he wrote, and the CFTC’s present view that the case should not have been brought “does not require vacatur or other relief.”
He also dismissed the coercion claim. Gemini litigated for roughly three years with counsel and “made the calculated decision to settle the case shortly before trial” — a “free, calculated, and deliberate choice” that courts do not lightly unwind. The judge described the shift in Washington — the January 2025 digital-assets executive order, a Justice Department memo and the CFTC’s new enforcement posture — as a change in enforcement priorities and policies, not a significant change in law.
What the Ruling Signals
The decision is an early test of whether crypto firms can unwind Biden-era enforcement actions under the current administration. Hellerstein’s answer suggests that a regulator’s change of heart is not enough: a party seeking to vacate a final consent order must show a post-judgment change in factual circumstances, not merely a change in policy. The ruling arrives as the CFTC pursues a broader rulemaking agenda for retail crypto trading, while Gemini has separately been building out its global licensing footprint.
The order did not reopen the merits of the 2017 statements that started the case; it decided only whether the settlement itself could be set aside. For now, the permanent injunction remains in force and the $5 million will not be returned under the parties’ May agreement. Neither Gemini nor the CFTC immediately announced whether it would appeal.
