A federal judge in Manhattan refused a joint request from the regulator and the crypto exchange to undo a settlement reached in January 2025, ruling that the parties had not met the legal standard to set it aside.
It is unusual for a regulator and the company it sued to ask a court together to wipe out their settlement. It is rarer for the court to refuse.
U.S. District Judge Alvin Hellerstein in Manhattan ruled on Thursday that the Commodity Futures Trading Commission and Gemini Trust Co. had not met the legal standard to set aside the settlement they reached in January 2025. "Neither of these arguments provide sufficient grounds for relief," he wrote, according to a published account of the ruling. In that agreement, Gemini, the exchange founded by the Winklevoss twins, paid $5 million to resolve a 2022 CFTC lawsuit over statements the company made while the agency was reviewing a proposed bitcoin futures contract. The case was settled shortly before it was due to go to trial.
In his ruling, Hellerstein pointed out that Gemini fought the case for over three years before it chose to settle. Neither the agency nor the company commented right away.
How the request arose
The CFTC moved in May to undo the settlement. According to accounts of the filings, the request traced back to an internal review at the agency that alleged misconduct by its own enforcement staff. The court did not test those allegations, which remain the parties' assertions.
Gemini paid the $5 million long ago. The settlement also includes a permanent injunction barring Gemini from making false statements to the CFTC, and that injunction remains in force.
Why it matters beyond Gemini
Since 2025, federal regulators have dropped or narrowed a number of crypto enforcement cases brought under the previous administration. Dropping a pending case is one thing. Vacating a settlement that a court has already approved is another, because it requires the court to reopen a final judgment.
Hellerstein's ruling shows that agreement between the parties may not be enough. A court that signed off on a settlement can decline to erase it even when the regulator that brought the case no longer wants it on the books. For other companies hoping to have consent judgments vacated, the decision is a signal, though a single district-court ruling does not bind other judges.
For Gemini, $5 million is small. The injunction is what remains in force.
The stock
Gemini shares traded at $3.685 in early afternoon, down 5%, near a year low of $3.385. Crypto exchange and broker stocks fell broadly on Friday, and the move cannot be attributed to the ruling.
Market implications
One reading is that judges will police the rollback of crypto enforcement, not just rubber-stamp it. Regulators can change priorities going forward, but undoing settled cases requires meeting a legal standard that a shift in policy does not satisfy on its own.
A second reading is that the decision will travel poorly beyond its facts. It applies one standard to one set of facts, an appeal is possible, and other judges may weigh similar requests differently.
What to watch
Whether the CFTC or Gemini appeals, the text of the order once available, and how judges handle any similar requests involving other crypto firms.