CFTC Says Gemini Case Should Never Have Been Filed

• The CFTC now says the Gemini lawsuit from 2022 should never have been filed.
• Gemini paid a $5M penalty, but regulators now want parts of the settlement vacated.
• Eleanor Terrett says CFTC Chair Mike Selig appears to oppose the Gemini case.

The US Commodity Futures Trading Commission is now trying to undo one of its own crypto enforcement cases.

On May 27, the CFTC and Gemini Trust Company jointly asked a federal court in the Southern District of New York to vacate parts of a January 2025 settlement tied to a long-running bitcoin futures case. The agency said the complaint should never have been filed under current enforcement standards.

The move is highly unusual because federal regulators rarely ask courts to reverse their own completed enforcement actions after a settlement has already been signed, approved, and partially executed.

The original case ended when Gemini agreed to pay a $5 million civil penalty and accept a permanent injunction tied to alleged false statements made during a Bitcoin futures certification process dating back to 2017.

Now the same regulator that brought the case says the evidence was weak, the whistleblower lacked credibility, and enforcement staff used improper tactics during the investigation.

CFTC Reverses Position on Gemini Case

The dispute began in 2022, when the CFTC accused Gemini of providing misleading information during the self-certification process for a BTC futures product linked to the Cboe Futures Exchange.

Regulators claimed Gemini failed to fully disclose information around loans and rebate programs that could have raised concerns over market manipulation in bitcoin futures trading.

Gemini denied wrongdoing but settled in January 2025 instead of continuing litigation. The settlement included a $5 million fine and restrictions preventing the company from making false or misleading statements to the CFTC in the future.

After reviewing the case internally, the agency now says the complaint relied heavily on testimony from a whistleblower whose account was known to have credibility problems.

The CFTC also said Gemini was actually the victim of fraud connected to rebate abuse involving former insiders and customers, while the agency instead pursued the exchange itself.

According to the filing, the review found several major issues inside the enforcement process. The agency said evidence requested by a commissioner was withheld before the vote to sue Gemini.

It also said litigation staff blocked Gemini from obtaining material needed for its defense while simultaneously putting internal CFTC discussions at the center of the case.

Court Must Decide Whether Settlement Gets Unwound

The request is now before a judge in the Southern District of New York. The CFTC and Gemini are asking the court to vacate the remaining prospective parts of the settlement, mainly the permanent injunction still attached to the case. The agency said the monetary penalty has already been paid and satisfied.

It remains unclear whether Gemini could recover the $5 million penalty if the court grants the motion.

Interestingly, Journalist Eleanor Terrett noted that private messages released last year showed former CFTC chair nominee Brian Quintenz refused to take a position on the Gemini matter before confirmation.

She added that current CFTC Chairman Mike Selig appears to have sided with the Winklevoss twins in concluding the case should not have been brought at all.

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