The Commodity Futures Trading Commission today announced it has joined Gemini Trust Company LLC in a motion for relief from judgment in CFTC v. Gemini Trust Company LLC, originally filed in the U.S. District Court for the Southern District of New York in June 2022 [See CFTC Press Release No. 8540-22]. The parties entered into a consent order in January 2025 [See CFTC Press Release No. 9031-25].
The CFTC conducted a comprehensive review of the history of the investigation, the evidence, the charging decision, the litigation tactics in the matter, and considered changes in federal digital asset policy resulting in the resolution of numerous digital asset investigations and cases across multiple government agencies.
As a result, the CFTC concluded the complaint should not have been filed — and would not have been under current enforcement standards. In particular, the review found that: (1) the complaint was largely based on a whistleblower’s account known to be lacking in credibility; (2) instead of focusing on alleged fraudsters, the investigation pursued Gemini, who was a fraud victim, for purported false statements to the CFTC during a registration application process; (3) there were serious questions about the strength of the evidence against Gemini; (4) requested evidentiary support was withheld from a Commissioner while the CFTC voted on the complaint against Gemini; (5) the complaint put the CFTC’s internal deliberations at issue but then litigation counsel invoked the deliberative process privilege and interposed objections to prevent Gemini from obtaining evidence necessary to defend itself; and (6) personnel improperly influenced the CFTC’s regulatory authority to create settlement leverage.
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.
Accordingly, the CFTC determined that continuing enforcement of the consent order’s prospective provisions serves neither the CFTC’s mission nor the public interest. The parties are now jointly moving the court to vacate the consent order as to the prospective provision because the consent order’s non-prospective provisions, such as its imposition of a civil monetary penalty, have already been satisfied, and applying the remaining provisions — including injunctive relief — prospectively would not be equitable.
