The Commodity Futures Trading Commission has taken the extraordinary step of publicly declaring that its own enforcement action against Gemini Trust Company should never have been brought—and is now asking a federal court to undo the settlement it secured just 16 months ago.
In a statement, the CFTC said it had conducted a “comprehensive review” of the investigation, the evidence, the charging decision, and the litigation tactics used in the case. The conclusion was unambiguous: the complaint “should not have been filed—and would not have been under current enforcement standards.”
The agency has now joined Gemini in a joint motion before the U.S. District Court for the Southern District of New York to vacate the consent order entered in January 2025. That order had imposed a $5 million civil monetary penalty and a permanent injunction barring Gemini from making false or misleading statements to the CFTC. Gemini has already paid the $5 million penalty—which cannot be recovered—but the prospective provisions, including the injunction, would be nullified if the court grants the motion.
Six Findings That Dismantle the CFTC’s Own Case
The CFTC’s review produced six specific findings, each of which calls into question how the enforcement division operated during the Biden administration:
- Discredited whistleblower: The complaint was “largely based on a whistleblower’s account known to be lacking in credibility.” The agency built its primary case around testimony it already knew was unreliable.
- Wrong target: Instead of pursuing alleged fraudsters, the investigation targeted Gemini — which the review identified as a fraud victim — for purported false statements made during a registration application process with the CFTC.
- Weak evidence: There were “serious questions about the strength of the evidence against Gemini,” raising doubts about whether the case could have survived trial.
- Evidence withheld from a Commissioner: Requested evidentiary support was withheld from a Commissioner while the CFTC voted on whether to file the complaint — meaning the Commission approved the action without full access to the underlying evidence.
- Privilege used to block defense: The complaint put the CFTC’s own internal deliberations at issue, but litigation counsel then invoked deliberative process privilege and objected to Gemini obtaining evidence it needed to defend itself — effectively arguing that the agency’s reasoning was relevant enough to sue over but too sensitive to disclose.
- Improper leverage: Personnel “improperly influenced the CFTC’s regulatory authority to create settlement leverage,” suggesting enforcement staff used the threat of regulatory consequences to pressure Gemini into settling.
The CFTC said these findings “not only call into question the CFTC’s enforcement process in this instance but also demonstrate the necessity of the federal government’s revised enforcement approach and standards, including in the digital asset space.”
The Backstory
The case originated in 2017, when Gemini was seeking to self-certify a bitcoin futures product through the CFTC. The agency later alleged that Gemini made false or misleading statements during that process about the susceptibility of its proposed bitcoin auction to manipulation — specifically regarding fee arrangements with certain market participants.
The CFTC filed the complaint in June 2022. Gemini denied the allegations and fought the case aggressively. In June 2025, Gemini filed a formal complaint with the CFTC’s Inspector General, accusing the enforcement division of abusing its authority for seven years. The exchange described the agency’s internal culture as “toxic” and named specific CFTC staff members it blamed for pursuing a “biased and unfair legal campaign.”
In January 2025, with a trial looming, Gemini agreed to a $5 million settlement without admitting or denying liability. The consent order included both the monetary penalty and a permanent injunction.
Now, 16 months later, the CFTC itself is saying the case should never have existed.
Part of a Broader Enforcement Rollback
The Gemini reversal does not exist in isolation. Under Chairman Michael Selig — confirmed in late 2025 as a Trump appointee — the CFTC has undergone a fundamental shift in how it approaches digital asset enforcement.
The agency has filed only two crypto enforcement cases under the current administration, compared to more than 80 during the Biden years. At least five other crypto investigations have been dropped. The CFTC withdrew its 2024 proposal to ban political prediction markets and has pivoted to actively defending Polymarket and Kalshi against state regulators.
A New York Times investigation published last week reported that CFTC staff members who raised concerns about crypto oversight — including questions about Polymarket, Crypto.com, and Gemini’s prediction market affiliate Gemini Titan — were suspended, investigated, or pushed out. The House Agriculture Committee has separately pressed Trump to fill the CFTC’s four vacant commissioner seats, warning that a one-member commission cannot keep pace with its expanding crypto jurisdiction.
The Gemini motion adds another data point to what critics describe as a systematic dismantling of crypto enforcement infrastructure, and what supporters call a long-overdue correction of regulatory overreach. The CFTC’s own language — acknowledging that personnel improperly used regulatory authority for leverage — lends weight to both interpretations simultaneously.
What Happens Next
The joint motion asks the court to vacate the consent order’s prospective provisions. The $5 million penalty has already been paid and cannot be reversed. If the court grants the motion, the permanent injunction and other forward-looking restrictions on Gemini will be lifted.
For Gemini, the vindication is substantive but not complete — the Winklevoss twins’ exchange spent years and significant legal resources defending itself against a case the government now admits was flawed from the start. Tyler Winklevoss now sits on the CFTC’s Innovation Advisory Committee alongside Kraken CEO Arjun Sethi, appointed by Chairman Selig in January 2026.
For the broader crypto industry, the Gemini reversal serves as the clearest example yet of the current administration’s position: that Biden-era enforcement actions against digital asset companies were not just aggressive but fundamentally flawed — and that correcting them is an active policy priority.
