Federal judge blocks Gemini and CFTC bid to erase misleading statements injunction

• Judge Alvin Hellerstein rejected arguments from both Gemini and the CFTC that the 2022 consent order should be vacated or modified.
• Gemini paid the $5 million civil penalty in full, but the permanent injunction against misleading statements to the CFTC remains enforceable on its record.
• The ruling blocks a political reversal engineered after a change in CFTC leadership, forcing Gemini to pursue license approvals under the shadow of a misconduct finding.

• $5M civil penalty imposed on Gemini in January 2025 consent order, now fully paid.
• May 2026 filing date when Gemini and CFTC jointly sought to vacate the injunction, denied by the court.
• 2017 year in which Gemini made false statements to the CFTC about Bitcoin futures manipulation risks.

U.S. District Court Judge Alvin Hellerstein in the Southern District of New York declined to reopen the consent order entered in January 2025, which required Gemini Trust Company LLC to pay $5 million and imposed a permanent injunction banning the exchange from making false or misleading statements to the CFTC. The ruling came in response to a joint motion filed in late May by Gemini and the CFTC seeking to vacate the injunction entirely. Hellerstein found that neither party presented facts sufficient to justify unwinding the order, despite both mounting separate legal arguments for relief.

Judge rejects CFTC’s own reversal of the enforcement action

The CFTC under its current chair, Michael Selig, argued that the original 2022 complaint should never have been filed and that its enforcement division had deployed “inappropriate tactics.” In its May filing, the commission concluded the action was without merit under its current regulatory scope.

Judge Hellerstein rejected this reasoning, writing that “newly acquired knowledge of facts that existed at the time the Consent Order was entered does not constitute a significant change in factual circumstances” and that “the CFTC’s present assessment that this action should not have been brought does not require vacatur or other relief.”

The CFTC’s reversal marked a dramatic shift from its prior position. In September 2025, then-nominee Brian Quintenz released text messages with the Winklevoss twins in which he said President Donald Trump “might have been misled” by the brothers over the Gemini case.

After Tyler Winklevoss characterized the enforcement action as “lawfare trophy hunting,” the Winklevoss twins allegedly pressed the White House to stall Quintenz’s confirmation. Trump withdrew the nomination and subsequently appointed Selig, who has since moved to undo years of crypto enforcement precedent.

Gemini’s coercion defense fails as settlement predated broader regulatory shift

Gemini argued that it had settled only under coercive pressure from regulators and should not be bound by a consent order entered under duress.

Hellerstein rejected this claim, noting that Gemini “made the calculated decision to settle the case shortly before trial,” after roughly three years of litigation. The judge observed that the exchange knew of its own internal problems, including a fraud scheme by its former chief operating officer. Gemini entered the settlement approximately three weeks before trial was scheduled to begin.

The underlying complaint, filed in June 2022, stemmed from false or misleading statements Gemini made to the CFTC in 2017 regarding risks of manipulation in a proposed Bitcoin futures contract to be settled by reference to an auction held on Gemini’s own platform.

Permanent injunction remains as Gemini stacks derivative licenses

The ruling leaves the injunction in place as Gemini pursues a full suite of CFTC derivatives licenses under President Cameron Winklevoss. Gemini Titan received designation as a Designated Contract Market in December 2025, enabling the launch of a prediction market, and Gemini Olympus, another affiliate, secured a Derivatives Clearing Organization license in May 2026. Winklevoss has stated the company is pursuing approvals for spot crypto, predictions, futures, options, and perpetual contracts as part of a “full-stack” marketplace.

The injunction does not block future license applications, but it remains part of Gemini’s regulatory record and may factor into the CFTC’s discretionary decisions on product approvals.

The ruling also leaves open what happens to the $5 million penalty Gemini already paid. Judge Hellerstein did not address whether refunds would have accompanied vacatur, and the CFTC has made no public statement on the question.

The practical effect of the denial is that the injunction, not the fine, was the core prize Gemini sought; clearing the finding of misconduct from the record would have smoothed regulatory relationships as Gemini builds out derivatives infrastructure in a friendlier regulatory environment under Trump and Selig.

The CCS read. We view the ruling as a setback for regulatory capture. The CFTC attempted to reverse its own enforcement judgment after political pressure and a change in leadership, a precedent that, if allowed, would have invited every regulated exchange to litigate old enforcement orders the moment leadership turns. The court’s refusal to rewrite history under new administrations protects the integrity of consent orders generally and signals that regulatory reversals require new facts, not new politics.

The open question is whether Selig’s CFTC will use its discretion to deny or delay Gemini’s pending license applications for futures and options in retaliation for the court’s refusal to vacate, or grant them as a signal that the political pressure campaign succeeded in practice even if the court rejected it in law.

Original reporting: cryptopolitan.com