Court preserves Gemini consent judgment after CFTC’s attempt to reverse the case

US District Judge Alvin Hellerstein on 15 October rejected Gemini Trust Company and the Commodity Futures Trading Commission’s (CFTC) joint request to reopen their consent judgment. The Manhattan court denied the original and amended motions.[1]

The ruling separates the CFTC’s changed enforcement position from the court’s test for reopening a concluded case. In May the agency said the complaint should not have been filed and would not be brought under its current standards. Removing the judgment’s continuing terms still required the court to grant relief.[4][2]

The dispute moved beyond the paid penalty

Gemini had already paid the $5 million. The parties expressly agreed that the money would not be returned even if their request succeeded. Their effort concerned the order’s continuing consequences, rather than a new payment obligation or a refund of the original penalty.[4]

The amended motion identified several continuing provisions: an injunction against false statements to the CFTC, restrictions on publicly denying the allegations, and terms governing the use of the consent order in future proceedings. The parties argued that those provisions could affect Gemini’s regulatory position long after the cash penalty had been satisfied.[5]

What the underlying case concerned

The original enforcement action concerned statements made during the CFTC’s review of a proposed bitcoin futures contract in 2017. That contract would settle against a price determined by an auction on Gemini. The consent order addressed representations about prefunding, self-trading controls, fee rebates and the trading volume and liquidity of that auction.[3]

Those details explain the market-structure issue. A futures settlement price links the derivative to activity in its reference market. Information about who can finance a trade, whether participants can trade with themselves and whether activity receives special rebates can affect the supervisor’s assessment of the reference price. The CFTC’s original announcement treated the statements as material to its manipulation review.[3]

The agency’s later review reached a sharply different assessment of its own investigation. It questioned the credibility of a whistleblower, the evidentiary basis of the complaint, the withholding of information and the use of regulatory pressure during settlement negotiations. These were the CFTC’s stated findings and arguments for reopening the case.[4]

Why the judge refused to reopen the judgment

Hellerstein treated the later-disclosed materials as information about pre-existing circumstances, not a post-judgment change. The parties had not shown the required prejudice. He also distinguished changed enforcement priorities from a significant change in law.[2]

He rejected using Rule 60(b)(6) to bypass the one-year limits for new-evidence or misconduct claims. Reuters separately highlighted his conclusion that Gemini voluntarily settled after extensive litigation.[2][7]

Consent by both parties was therefore insufficient. The court assessed the grounds and timing for relief under Rule 60, while the CFTC’s later view of the original investigation remained the agency’s position.[2][4]

The no-deny policy had already changed

One part of the operating context changed after the joint motion. On 3 June, the CFTC rescinded its no-deny settlement policy and said it would not enforce existing clauses of that kind. The October refusal to vacate the judgment therefore sits alongside an agency policy that had already reduced the practical enforcement threat attached to those clauses.[6]

The opinion also preserves the CFTC’s discretion to consider current policies when deciding whether to enforce the order. Gemini’s resulting position combines a judgment that remains on the court record with an agency that has changed its approach to pursuing its terms.[2]

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