Crypto exchange Gemini has to pay a million-dollar fine despite striking support

Crypto exchange Gemini has to pay a million-dollar fine, despite a remarkable attempt by the US regulator to undo the punishment. A federal judge has ruled that a previous settlement remains valid. Even the supervisor who filed the case wanted to cancel the agreement by now. What is behind this striking decision?

U.S. District Judge Alvin Hellerstein ruled Thursday that the settlement between Gemini and the Commodity Futures Trading Commission (CFTC) remains in force.

This means that Gemini will remain permanently bound by the January 2025 agreement, in which the crypto exchange agreed to a $5 million fine.

Remarkably, Gemini and the CFTC had asked together to destroy the settlement. The regulator argued that the case would probably not even have been pursued under the current enforcement policy.

During an internal investigation, possible abuses in the handling of the case were also discovered.

Yet Hellerstein found these arguments insufficient. According to the judge, changes in policy and allegations of misconduct do not constitute a legal basis for reversing a voluntary agreement.

In addition, the fine has already been paid in full. The CFTC had previously indicated to Cointelegraph that Gemini would not get the money back, even if the settlement was still annulled.

The remarkable turnaround began on May 27, when Gemini and the CFTC jointly filed a request to cancel their previous agreement.

The reason for this was an internal investigation at the supervisory authority. Evidence emerged that the enforcement department may have made mistakes during the Gemini investigation.

For example, employees would have used information from a whistleblower whose reliability was questioned.

In addition, employees allegedly exerted undue pressure and tried to prevent certain evidence from being made public.

The findings raised questions about the way the regulator had handled the case.

However, according to Hellerstein, Gemini was already aware of several issues when the company agreed to the settlement in January 2025. At that point, the lawsuit would begin within three weeks.

The crypto exchange later received additional internal documents from the CFTC. But according to the judge, they do not contain enough new information to invalidate the previously made agreements.

The original case revolved around the information Gemini had provided about its Bitcoin (BTC) trading platform.

According to the settlement, Gemini had not shared important information about the operation of its Bitcoin auction clearly enough with the regulator.

For example, the company did not make it sufficiently clear that some customers traded with borrowed money. There were also transactions where the same party was both buyer and seller.

This practice is known as self-trading and can give a misleading picture of how much is actually traded on a trading platform.

In addition, certain merchants received special fees, without Gemini providing sufficient information about them.

According to the settlement, the delivered trade volumes also did not give a complete picture, because it was not made clear that some of the transactions were related to these commercial practices.

The information was important for the CFTC to assess how Bitcoin trading worked on the platform.

Gemini and the CFTC also hoped that the changed US crypto policy would help to get the fine off the table.

Under President Donald Trump, the US government has set a different course for the crypto sector. The CFTC has adjusted its enforcement policy and has started to look more critically at which cases it wants to actively prosecute.

According to Gemini and the regulator, that was an additional reason to nullify the settlement.

Hellerstein did not go along with that. He stressed that these are changes in policy and not fundamental changes in legislation.

According to the court, a new political course does not mean that previously concluded legal agreements automatically become invalid.

The CFTC's attempt to roll back a completed lawsuit has already led to astonishment.

Former CFTC Chairman Timothy Massad called the course of events vis-à-vis Cointelegraph “extremely unusual”. According to him, the public deserves a better explanation of why the regulator wanted to destroy an existing settlement.

In addition to the multi-million dollar fine, a permanent ban remains in place that prevents Gemini from making false or misleading statements to the CFTC.

The settlement also contains a provision prohibiting Gemini from publicly denying the findings found.

However, the regulator announced in June that it will no longer maintain such restrictions.