A key U.S. regulator is now asking a Manhattan federal judge to wipe out a $5 million penalty that Gemini, the cryptocurrency exchange founded by Tyler and Cameron Winklevoss, paid under a January 2025 settlement. The motion, filed in Manhattan federal court, seeks to vacate the consent order that had resolved the Commodity Futures Trading Commission's claims.
In a set of jointly filed court papers, the Commodity Futures Trading Commission urged the judge to withdraw the consent order and scrap the fine, saying agency staff should not have accused Gemini of making false statements and that enforcement lawyers relied on flawed evidence, according to Reuters. The filing asks the court to set aside the January 2025 settlement that had appeared to close the book on the agency's case.
Gemini has publicly pushed back on the agency's tactics, telling the CFTC's inspector general that enforcement staff took such aggressive positions the company felt it had little choice but to settle, Blockworks reported. The company and its lawyers say some of the evidence leaned on a whistleblower account and internal misconduct that led investigators astray.
How The Penalty Originated
The consent order stems from a CFTC complaint filed in 2022 over statements Gemini made while seeking approval to launch a bitcoin futures contract. In a Jan. 13, 2025 press release, the commission said the order found Gemini had made materially false or misleading statements and imposed a $5 million civil penalty along with a permanent injunction. The release highlighted issues with assertions about prefunding requirements, fee rebates, trade volume and liquidity, according to the CFTC.
What The Filings Say Now
In the new joint papers, the CFTC and Gemini now say investigators were misled by fraud involving the company's former chief operating officer and two customers who allegedly received fraudulent rebates, and they jointly ask the court to vacate the settlement. The filing does not resolve whether Gemini will get its $5 million back. Reuters reports the request to vacate was lodged in Manhattan federal court.
Legal And Market Implications
If a judge grants vacatur, the consent order's findings would be erased, an uncommon step that could complicate how agencies lean on settlements to close investigations. The move also arrives amid a shifting enforcement landscape for crypto, as the SEC asked a judge to dismiss its separate case against Gemini in January 2026, Bloomberg reported, signaling that regulators are re-evaluating some past actions.
A federal judge will now review the parties' submissions and decide whether the consent order stands or vanishes from the record. Whatever the ruling, the case is likely to be watched closely by other exchanges, lawyers and enforcement officials as a test of when and how regulators can unwind prior settlements.
