CFTC asks court to vacate Gemini settlement, calls it unfair

The U.S. Commodity Futures Trading Commission (CFTC) on May 27, 2026 joined Gemini Trust Company LLC in a joint motion asking a federal court to vacate portions of the consent order that resolved a prior CFTC enforcement action. After a comprehensive internal review, the agency concluded the 2022 complaint “should not have been filed” and would not have been pursued under current enforcement standards.

The CFTC review identified several procedural and evidentiary problems: the underlying complaint relied heavily on a whistleblower account the agency now characterizes as lacking credibility; investigators focused on Gemini—portrayed as a victim of alleged fraud—rather than on the alleged perpetrators; and there were questions about the strength and handling of the evidence, including allegations that requested evidentiary support was withheld from a Commissioner during the agency vote. The parties jointly asked the U.S. District Court for the Southern District of New York to vacate the prospective injunctive provisions because the monetary penalty had already been satisfied.

The original settlement, entered in January 2025, included a $5 million civil monetary penalty and injunctions barring Gemini from making false or misleading statements to the Commission. If the court grants the motion, remaining prospective requirements—such as the injunction—would be nullified, altering the regulatory constraints that have applied to Gemini since the settlement. Market observers note the move reflects broader shifts in U.S. digital asset enforcement policy under current leadership.

This development underscores how changes in regulatory leadership and enforcement philosophy can prompt agencies to reconsider past enforcement outcomes. The CFTC stated its findings demonstrate the necessity of revised federal enforcement approaches for digital assets and highlight risks in prior investigatory and litigation tactics. Legal commentators say the decision to seek vacatur signals increased willingness by regulators to correct prior actions they now view as inconsistent with updated standards.

Analysts expect the court fight to be closely watched by exchanges, market infrastructure providers and compliance teams across the crypto sector. A court order vacating prospective provisions would relieve Gemini of ongoing operational constraints but could also prompt additional reviews of past settlements by other agencies. The Southern District of New York’s ruling will likely set an important precedent for how regulators can and should revisit earlier enforcement resolutions.