CFTC seeks to vacate $5M penalty against Gemini Trust Company

The US Commodity Futures Trading Commission wants to undo one of its own enforcement wins. On May 27, the CFTC and Gemini Trust Company jointly filed a motion in the Southern District of New York to vacate a $5 million civil penalty and permanent injunction that Gemini agreed to pay just months ago, in January 2025.

The agency’s reasoning is blunt: the original accusations were based on non-credible whistleblower information, and the CFTC “should never have accused Gemini of making false statements.”

What the original case was about

The complaint traces back to mid-2022, when the CFTC accused Gemini of making misleading statements during its 2017 self-certification of bitcoin futures on the Cboe Futures Exchange. Self-certification is the process through which exchanges verify that new products comply with existing regulations. The allegations claimed that Gemini failed to provide complete information on loans or rebates that could affect the futures contract’s perceived susceptibility to market manipulation.

Gemini, the crypto exchange founded by Cameron and Tyler Winklevoss, denied wrongdoing but settled the case in January 2025 rather than go to trial. The terms included a $5 million civil monetary penalty and a permanent injunction barring the company from making false or misleading statements to the CFTC.

A new administration, a new enforcement philosophy

The joint motion to vacate reflects what the CFTC describes as “changed policies” under the current administration. The agency acknowledged that the tactics used during the Biden-era investigation were inappropriate, and that the underlying accusations relied on whistleblower information that lacked credibility.

The political backdrop here is impossible to ignore. Each Winklevoss twin donated $1 million in Bitcoin to Donald Trump’s 2024 presidential campaign. That’s $2 million in crypto flowing toward the candidate who won the White House, followed by that candidate’s regulators asking a judge to give the donors’ company its penalty back.

The motion is now before a federal judge in the Southern District of New York, who will ultimately decide whether to grant the request. Consent orders are legal agreements, and vacating one is not automatic. The court will need to be satisfied that unwinding the settlement serves the interests of justice.

What this means for the crypto industry

If the motion succeeds, it establishes a template. Other crypto firms that settled enforcement actions during the previous administration could seek similar reversals, arguing that the regulatory environment that produced those cases was itself flawed.

The Gemini case also highlights the peculiar dynamics of consent orders in crypto enforcement. When firms settle to avoid litigation costs rather than because they agree with the charges, the resulting orders rest on a pragmatic foundation rather than a factual one. That makes them more vulnerable to reversal when political winds shift.

Investors watching this space should pay close attention to how the Southern District of New York handles the motion. A judge granting it would signal that courts are willing to revisit settled crypto enforcement actions, potentially opening the floodgates for similar requests. A denial would suggest that even in a friendlier regulatory environment, what’s done is done.

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