Judge Refuses to Erase Gemini’s $5M Settlement Despite CFTC Reversal

Gemini and the CFTC Want Their $5 Million Case Erased, but Judge Says No

A federal regulator sued Gemini, collected $5 million and then decided it never should have brought the case. Even stranger, the agency joined the cryptocurrency exchange in asking a judge to erase their settlement. That didn’t work either. On Oct. 15, U.S. District Judge Alvin Hellerstein rejected the joint request, keeping the January 2025 agreement intact despite the Commodity Futures Trading Commission (CFTC) reversing its position on the original lawsuit. Gemini’s $5 million penalty, already paid, isn’t coming back.

From Enforcement Case to Government Regret

The dispute began with Gemini’s involvement in a proposed bitcoin futures contract in 2017. Regulators alleged the exchange misled them about trading safeguards, customer financing, special fee arrangements and activity that could influence the contract’s pricing. The CFTC sued in June 2022, and Gemini settled in January 2025 without admitting or denying the allegations. The agreement included a $5 million penalty and a permanent injunction against misleading the agency.

Then came the reversal. In May 2026, the CFTC joined Gemini in seeking to vacate the settlement. Following an internal review, the agency concluded the lawsuit should never have been filed, citing concerns about a whistleblower’s credibility, questionable evidence and its own enforcement practices. Gemini argued that mounting legal expenses and the approaching trial had pressured it into settling. The company even agreed to let the government keep the $5 million if the order was overturned.

Judge Rejects the Government’s About-Face

Hellerstein wasn’t persuaded. Most of the concerns raised by the CFTC involved circumstances that existed before the settlement. Alongside this, the centralized exchange (CEX) and crypto firm Gemini voluntarily accepted the agreement after years of litigation. The judge also rejected the idea that a new administration’s enforcement priorities justified undoing a binding court order.

The ruling leaves Gemini subject to the original injunction, although the CFTC retains discretion over enforcement. The irony is difficult to miss. The government now questions its own prosecution, Gemini wants the settlement gone, and neither side can convince the court to erase it.