The U.S. Commodity Futures Trading Commission has moved to vacate the $5 million settlement it reached with crypto exchange Gemini, arguing that the enforcement action rested on flawed allegations. Gemini agreed to pay the penalty in January 2025 after the agency accused the firm of making false or misleading statements related to a Bitcoin futures contract.

In a joint filing in a Manhattan federal court, the CFTC and Gemini asked the court to void the consent order, with the agency stating it had reviewed the matter and concluded that the “complaint should not have been filed — and would not have been under current enforcement standards.” The filing also notes that the complaint “was largely based on a whistleblower’s account known to be lacking in credibility.” The CFTC added that continuing enforcement of the consent order’s prospective provisions would not serve its mission or the public interest.

The case traces to allegations that Gemini issued misleading statements in 2022 during the review of a Bitcoin futures contract, particularly concerning auction volumes and liquidity. The CFTC said these claims were relevant to risk assessment and the contract’s approval. The agency’s complaint relied on a whistleblower from 2017 who purportedly alleged that Gemini inflated trading activity to distort user demand.

The CFTC’s motion also contends that Gemini was the victim of fraud in a separate matter, asserting that two customers exploited Gemini’s “preferential fee structures through a coordinated rebate-fraud scheme,” with the customers allegedly admitting defrauding Gemini of $7.5 million. The agency argued that past leadership did not act on those admissions. The politics surrounding the filing have drawn attention, as observers note a broader pattern of crypto enforcement actions that have faced shifts in priority across administrations.

The filing comes amid heightened scrutiny of crypto firms and a broader regulatory environment that intersects with policy debates on how the sector should be overseen, including licensing, disclosure standards, and the balance between innovation and investor protection. Responding to questions about the motion, Gemini and the CFTC indicated they would seek further comment when the court proceedings proceed. The outcome could influence ongoing obligations under the settlement, including an injunction prohibiting false or misleading statements to the agency, and it remains to be seen whether the $5 million penalty would be refunded if the settlement is vacated.

Cointelegraph’s reporting suggests the case sits within a wider discussion of enforcement posture and policy shifts affecting crypto firms, exchanges, banks, and investors, particularly as regulators reassess precedent and standards for disclosures, risk assessment, and market integrity in connection with novel crypto derivatives products. For context, the original complaint centered on statements made during the Bitcoin futures contract review process, with the CFTC asserting that information about liquidity and auction volumes informed regulatory approvals.

Key takeaways

• The CFTC and Gemini filed a joint motion in Manhattan to vacate the $5 million settlement, claiming the underlying complaint should not have been filed under current enforcement standards.
• The agency says the whistleblower account central to the case was largely lacking credibility, and continuing the consent order’s prospective provisions would not serve the public interest.
• The motion seeks to end ongoing obligations, including an injunction prohibiting false or misleading statements to the CFTC; it remains unclear whether the penalty would be refunded if vacatur occurs.
• The case links to 2022 statements about a Bitcoin futures contract’s auction volumes and liquidity and to a 2017 whistleblower claim about inflated trading activity; the credibility of those sources is central to the dispute.
• Context around the filing frames it within a broader discussion of crypto enforcement posture in the United States and regulatory priorities across administrations.

Unwinding the settlement and the legal questions

The core legal maneuver is a bid to vacate the consent order that accompanied the January 2025 settlement. By seeking to end the injunction and other prospective provisions, the CFTC signals a strategic re-evaluation of the case’s basis and its alignment with current enforcement standards. The agency notes that Gemini has already paid the $5 million penalty, but the question of whether the payment would be refunded if the settlement is vacated remains unresolved.

From a procedural standpoint, the motion frames the original complaint as overly dependent on a whistleblower account that the CFTC now characterizes as lacking credibility. The court will assess whether vacatur is appropriate, balancing past remedial measures with the agency’s current enforcement philosophy and public-interest considerations.

Regulatory context and policy implications

The CFTC’s request to unwind the Gemini settlement arrives amid ongoing regulatory debates about how crypto markets should be overseen, how disclosures should be handled, and how to calibrate enforcement actions in light of evolving market structures. The decision could influence future remedies for similar cases, particularly around whether settlements that involve injunctive provisions should be treated as final, even when subsequent questions about the sufficiency of the original allegations arise.

For market participants, the development underscores the importance of robust, verifiable disclosures in relation to derivative products tied to digital assets. It also highlights the interplay between enforcement actions and consent orders, and how regulators may revisit settlements in light of new standards or evidence. The outcome may affect how exchanges and crypto businesses approach risk disclosures, audit trails, and communications with regulators during reviews of new products.

In a broader regulatory frame, observers note the case against Gemini touches on ongoing questions about licensing, cross-border oversight, and the alignment of U.S. enforcement with international standards. The discussion intersects with policy considerations around MiCA implementation in Europe, the roles of the SEC and CFTC in crypto oversight, and the design of AML/KYC frameworks that govern digital-asset markets.

Notably, the move has drawn commentary about how enforcement actions in the crypto space have evolved with changes in administration and regulatory leadership. The broader narrative, as reported by industry observers, is that aggressive cases in certain periods may be revisited or reframed as policy priorities shift.

According to Cointelegraph, the development should be evaluated in the context of how enforcement actions translate into practical compliance requirements for exchanges, banks, and institutional investors, and how courts adjudicate the balance between remedial settlements and the possibility of revisiting foundational allegations.

Gemini and the CFTC have not publicly released further remarks beyond the procedural filings, and the court has yet to determine the next steps in the vacatur process. Analysts and compliance teams will be watching for the judiciary’s ruling, any adjustments to ongoing obligations, and potential implications for similar settlements involving other market participants.

Closing perspective: The vacatur motion highlights the fragility of consent-based settlements when new standards or credibility concerns arise. As regulators reassess the evidentiary basis of past actions, market participants can expect heightened scrutiny of disclosures, governance, and risk-management practices in relation to crypto derivatives and futures products.

Nearly half of the organizations onboarded into the crypto industry in 2026 are operating at alerting standards that would have made them industry leaders only a few years ago, according to Chainalysis.

In a preview of a report published on Wednesday, Chainalysis said that the crypto industry’s compliance baseline around alert severity, trigger sensitivity and minimum dollar detection floors is tightening, with about 47% of organizations onboarded this year using alerting standards that would have placed them in the top 10% of strictness in 2020.

It added that companies have become more uniform in direct monitoring, where funds arrive immediately from a known illicit source, but there is still a gap with indirect monitoring, where the funds pass through intermediary addresses.

Compliance-alerting standards have improved significantly across the industry over the last few years. Source: Chainalysis

The industry has been raising its security and compliance in response to stricter regulations and growing threats from hackers. North Korean-affiliated hackers alone were responsible for an estimated $2 billion in crypto losses in 2025.

Chainalysis said that in 2020, the industry was still establishing norms, with only 10% meeting the top requirements. However, the rate started increasing in 2023, and now “newer entrants are launching with more aggressive monitoring.”

“This is a sign of rapid ecosystem maturation. Standard compliance configurations today would have been considered industry-leading just five years ago. The industry financial institutions are joining has already built substantial compliance infrastructure, and the bar continues to rise.”

Crypto has a gap in indirect monitoring

Legacy financial institutions have lower triggering thresholds for indirect exposure to both illicit and non-illicit fund flows and are alerted to smaller sums. On average, crypto exchanges set much higher alerting thresholds, and the thresholds vary across categories, according to Chainalysis.

Related: Coinbase execs face new lawsuit seeking damages, insider profit clawbacks

Categories such as ransomware, fraud shops, scams and darknet markets often have indirect thresholds 10 to 20 times higher than their direct equivalents.

“The industry’s gap between direct and indirect monitoring creates an opening for illicit actors to exploit. Organizations that close this gap improve their regulatory defensibility and differentiate themselves as trustworthy counterparties,” the Chainalysis team said.

“The data in this chapter point to an industry in transition, one that has professionalized its approach to direct exposure but which may not yet be treating indirect risk with equivalent rigor.”

Magazine: Polymarket seeks Japan entry, Harvard dumps entire ETH position: Hodler’s Digest, May 17 – 23    

Cryptocurrency markets have shed around $80 billion in value over the past 24 hours, with losses accelerating after the US reportedly carried out a new wave of military strikes on Iran.

The US ​military carried out new strikes late on Wednesday targeting ‌an Iranian military site and shooting down four Iranian attack drones, which a ​US official told Reuters posed a threat around the Strait of Hormuz.

“These actions were measured, ‌purely ⁠defensive, and intended to maintain the ceasefire,” the official said. Iran’s Islamic Revolutionary Guard Corps reportedly released a statement saying that it has retaliated by attacking a US airbase in Kuwait.

The strikes came during negotiations to end the war that began on Feb. 28 with US and Israeli attacks. US President Donald Trump said at a White House cabinet meeting on Wednesday that he was “not satisfied” with a deal with Iran and alluded to further military action.

The US strikes sent crypto markets tumbling to their lowest level since mid-April, after the market had climbed earlier this week after Trump hinted that a peace deal would soon be finalized.

Bitcoin has lost 3.5% on the day, falling to $72,646 on Coinbase, its lowest level since April 13.

Bitcoin fell to a six-and-a-half-week low after US strikes on Iran on Wednesday. Source: TradingView

LVRG Research director Nick Ruck told Cointelegraph on Thursday that markets sold off as investors priced in heightened geopolitical risk, potential oil supply disruptions, and a flight to safety. 

Related: Bitcoin falls further as BTC miners pivot to AI, pro-crypto legislation stalls

 “Bitcoin and Ethereum, despite their long-term narrative as hedges, continue to behave more like high-beta risk assets during periods of uncertainty,” he said. 

“Traders are now monitoring escalation risks in the Middle East, and any effects on inflation and Fed policy as crypto liquidity quickly thins, and leveraged positions get flushed out.”

Ether (ETH) also fell on news of the strikes, collapsing below the psychological $2,000 level, slumping more than 4% to $1,976 at the time of writing. The asset is at its lowest level since late March. 

Crude oil prices also reacted with a 3.5% increase as WTI topped $92 while Brent climbed to $98 per barrel.

Magazine: Polymarket seeks Japan entry, Harvard dumps entire ETH position: Hodler’s Digest

Ether’s (ETH) price sell-off is gathering steam amid broader market risk aversion. Yet its futures market is busier than ever, creating a notable divergence with bearish implications.

ETH dropped below $2,000 on Thursday morning for the first time since late March. It is down nearly 8% over the past seven days, with losses exceeding 5% in the last 24 hours alone, according to CoinDesk data.

“More and more people giving up on ETH as it doesn’t generate revenue and with higher bond yields the staking yield is unattractive. The only buyer has been Bitmine but they indicated that they will slow down their purchases,” Markus Thielen, founder of 10x Research, said in an email.

What makes ether’s sell-off particularly interesting is that open interest in ether futures has risen for the third straight day, hitting a record high of 16.39 million tokens, according to data source Coinglass. That equates to a notional open interest of about $32.5 billion. In simple terms, more money is flowing into futures, a leveraged product that amplifies both gains and losses.

However, this record open interest, combined with a negative seven-day OI-adjusted cumulative volume delta (CVD) and the falling spot price, points to aggressive net selling. A negative CVD indicates that price action is being driven by traders taking bearish bets via market orders rather than passive limit orders.

The bearish bias is not limited to futures. Spot Ether ETFs listed in the U.S. have seen cumulative outflows of $401 million this month, more than reversing the $354 million inflow recorded in April, according to SoSoValue data.

Sentiment around Ether has also deteriorated. The Ethereum Foundation has faced high-profile departures, including prominent contributors Carl Beekhuizen and Julian Ma.

“High profile departures from the Ethereum Foundation are also a sign that the original vision is no longer capturing these followers,” Thielen said.

This trend extends to prominent thought leaders and long-time holders. David Hoffman, co-founder of Bankless, recently announced he sold his ETH holdings after concluding that the long-standing thesis of “ETH is money” has largely played out.

Some analysts believe the market is increasingly questioning how much of Ethereum’s dominance in DeFi, tokenization, and other sectors is flowing back to its native token ETH.

“Ethereum’s problem is not that the chain has stopped mattering. It is that the market is questioning how Ethereum’s infrastructure strength translates back to ETH,” Web3 research and consultancy firm House of Chimera said on X.

The firm added that Ethereum still leads other smart contract blockchains in raw ecosystem development activity, with millions of meaningful GitHub events, but noted that prices and sentiment can weaken faster than developer commitment.

U.S. authorities have charged a Google software engineer with insider trading tied to prediction markets, as federal regulators continue tightening scrutiny around Polymarket and other event-based trading platforms.

According to the U.S. Department of Justice, Google employee Michele Spagnuolo allegedly used confidential company information to place trades on Polymarket before Google publicly released its 2025 search trend rankings.

Prosecutors said the trades generated roughly $1.2 million in profit through a Polymarket account operating under the name “AlphaRaccoon.”

Court filings unsealed on Wednesday alleged that Spagnuolo placed 25 bets totaling about $2.7 million on markets linked to the most searched individuals on Google in 2025. Prosecutors claimed those bets targeted outcomes that Polymarket users had treated as unlikely before Google published the rankings in December.

Alongside the criminal case, the Commodity Futures Trading Commission filed a parallel civil complaint accusing Spagnuolo of insider trading violations in commodities markets. The agency said the case forms part of a growing enforcement focus on prediction-market activity involving confidential information.

Speaking in a statement released by the Justice Department, Manhattan U.S. Attorney Jay Clayton said the charges send a warning that “corporate insiders cannot use confidential business information to turn a profit in our markets.”

Federal agencies have recently intensified attention on insider trading risks tied to prediction markets. Earlier this year, seven members of the U.S. House of Representatives questioned why the CFTC had not acted more aggressively against suspicious trading linked to geopolitical event contracts involving Iran and Venezuela.

In their April letter to CFTC Chair Michael Selig, lawmakers described some event contracts as “morally obscene” and said trades tied to possible U.S. military actions raised concerns about the misuse of nonpublic information. The lawmakers also warned that weak oversight could damage confidence in the sector.

CFTC increases pressure on prediction markets

Separate statements from the CFTC have shown the agency moving toward a more aggressive enforcement approach. Enforcement Director David Miller said in April that insider trading laws apply to prediction markets and rejected claims circulating online that such activity falls outside existing rules.

Key Takeaways

• On May 15, 2026, United Texas Bank successfully transitioned from a Texas state charter to a national charter issued by the OCC
• UTB now operates with identical federal privileges as Wall Street giants including JPMorgan and Bank of America
• The institution processes approximately $10 billion monthly in dollar volume for international crypto companies
• UTB Atomic, a new AI-powered 24/7 payment infrastructure for crypto liquidity, is set to launch
• Annually, UTB facilitates more than $120 billion in cryptocurrency transactions and provides banking services to crypto firms rejected by traditional banks

A Dallas-based financial institution with four decades of history has emerged as a critical infrastructure provider for cryptocurrency companies across America. Now, it’s expanding its reach nationwide.

United Texas Bank received authorization from the Office of the Comptroller of the Currency to transition from its state banking charter to national bank status. The regulatory approval was granted on May 15, 2026, with final requirements completed by May 27.

This transition positions UTB as among the first financial institutions to successfully complete an OCC charter conversion in the 15 years since Dodd-Frank legislation was enacted.

According to CEO Scott Beck, the national charter upgrade grants UTB equivalent regulatory status to major money-center institutions such as JPMorgan Chase and Bank of America. This includes matching federal licensing, comprehensive trust capabilities, and unmediated access to the Federal Reserve’s wire transfer and automated clearing house networks.

Implications for Digital Asset Companies

The majority of cryptocurrency businesses face significant obstacles when attempting to establish banking relationships with major U.S. financial institutions. For approximately five years, UTB has addressed this market void, facilitating more than $120 billion in digital asset transactions each year.

“If you’re a digital asset player, you can’t get an account at a Bank of America or a Citibank,” Beck said. “You can come to United Texas Bank and basically have full access to the U.S. dollar.”

Currently, the bank processes $10 billion monthly in dollar transactions for international banking partners, over-the-counter trading desks, and prominent cryptocurrency exchanges. The national charter significantly enhances UTB’s capacity to support these clients through federal-level infrastructure.

Beck acknowledged that since 2024, the bank has operated under a Federal Reserve Consent Order concerning Bank Secrecy Act adherence. Instead of viewing this as a setback, UTB leveraged the situation to develop UTB Prism Sentinel, a proprietary compliance platform that conducts real-time blockchain monitoring.

UTB Atomic: Always-On Payment Infrastructure for Continuous Markets

UTB is introducing UTB Atomic, an artificial intelligence-powered real-time settlement network designed to address a critical market need. Following the failures of Silvergate and Signature Bank, continuous crypto liquidity infrastructure effectively disappeared.

Conventional banking institutions have business hours. Crypto markets operate continuously. This discrepancy creates settlement delays for institutional market participants during overnight hours.

UTB Atomic facilitates instantaneous, off-balance-sheet settlement between institutional counterparties regardless of time. Prism Sentinel operates concurrently, providing continuous transaction monitoring for regulatory compliance.

Beck noted the platform is engineered to accommodate forthcoming federal regulations, including stablecoin governance frameworks established under the GENIUS Act and Clarity Act.

UTB faces growing competition in this sector. Minnesota recently enacted legislation permitting state-chartered banks and credit unions to provide cryptocurrency custody solutions, broadening the competitive landscape.

A comprehensive digital asset custody and trust division is planned for launch at UTB during the upcoming summer months.

Beck characterized UTB as “a centralized value hub” — an institution that remains relatively obscure nationally but serves as essential infrastructure for crypto companies lacking alternative banking options.

Chainalysis says crypto firms entering the market in 2026 are starting with tougher compliance settings than many older firms used five years ago. 

The finding points to a market where monitoring tools are now part of basic operating standards, not only a concern for large exchanges.

The report’s main angle is clear: crypto companies have raised their alerting standards, but indirect exposure still leaves room for bad actors to move funds through extra wallet layers before detection.

Chainalysis says new crypto firms use stricter alerts

In a May 27 report preview, Chainalysis said nearly 47% of organizations onboarded in 2026 now use alerting standards that would have ranked in the top 10% for strictness in 2020. The firm measured alert severity, trigger sensitivity, and minimum dollar floors for indirect illicit exposure.

Chainalysis said the change shows how fast baseline compliance has moved since 2020, when many firms were still setting common rules for on-chain risk alerts. “Standard compliance configurations today would have been considered industry-leading just five years ago,” the firm said.

Indirect monitoring remains the main weak spot

The report draws a clear line between direct and indirect exposure. Direct exposure covers funds that come straight from a known illicit source. Indirect exposure covers funds that pass through one or more intermediary wallets before reaching a platform.

Chainalysis said direct monitoring has become more uniform across regions. The gap sits in indirect monitoring, where alert thresholds can be much higher. For ransomware, fraud shops, scams, darknet markets, and sanctioned jurisdictions, indirect thresholds often sit 10 to 20 times above direct thresholds.

Banks still use lower alert thresholds

Chainalysis also found that traditional financial institutions keep tighter alerting floors than crypto exchanges. For indirect exposure to non-illicit flows, the firm said crypto exchanges set average alerting minimums at $950, compared with $150 for traditional financial institutions.

The gap narrows for illicit flows, but banks still run stricter settings. Chainalysis said crypto exchanges set alerts for illicit flows from $100, while financial institutions set the floor at $55. That difference matters as more banks test stablecoins, tokenized assets, and crypto custody.

Compliance pressure grows across crypto markets

The report fits a wider compliance push across the digital asset market. As previously reported by crypto.news, Polymarket tapped Chainalysis in April to monitor insider trading and manipulation across its prediction markets after volumes reached more than $7 billion monthly.

Separate crypto.news coverage also showed rising pressure around cross-chain AML gaps, Binance monitoring duties, stablecoin controls, and North Korean hacking activity. Chainalysis reported that North Korean-linked actors stole more than $2 billion in crypto in 2025, adding urgency to stronger fund-flow monitoring systems.

A Bank for International Settlements-led trial has shown that tokenized central bank money and bank deposits can complete cross-border payments in a single atomic step across currencies.

According to the Bank for International Settlements (BIS), Project Agorá has tested how tokenized central bank reserves and commercial bank deposits can settle transactions on an “all-or-nothing” basis, so neither side is left exposed if the other leg fails.

Project Agorá tests tokenized bank money

Under today’s system, the BIS said a cross-border transfer can pass through multiple intermediary banks before reaching the recipient, which can stretch settlement to days and add operational risk during reconciliation. In the Project Agorá design, the BIS and participants used tokenization and blockchain-style rails to reduce handoffs and complete settlement simultaneously across jurisdictions.

Project Agorá is a joint effort between the BIS, seven central banks, and more than 40 private financial institutions. The BIS said participating central banks include the Federal Reserve Bank of New York, the Bank of England, the Bank of Japan, and the Swiss National Bank, as well as major commercial banks and financial firms.

Project Agorá launched in April 2024 and spent about a year and a half in a design phase before moving into a prototype stage in 2025, the BIS said. Active testing began in January 2026, which the BIS described as the point where the initiative moved past concept work and into something closer to an operating system.

Participants now plan to move beyond simulations toward tests that involve real-value transactions using selected currencies and institutions, the BIS said. During the same week, the BIS said the Bank of Canada joined the initiative.

Tokenization efforts expand beyond payments

Outside the Agorá workstream, the BIS noted that financial market infrastructure providers and exchanges are building tokenized settlement systems for traditional securities. The BIS pointed to DTCC’s plan to roll out tokenized settlement infrastructure for stocks, ETFs, and U.S. Treasuries, while Nasdaq and Intercontinental Exchange are also developing blockchain-based systems for tokenized equities.

Project Agorá also sits alongside the G20’s cross-border payments roadmap set in 2020. The BIS framed Agorá as an attempt to show that unified ledgers and tokenization can deliver greater improvements than small changes to legacy payment plumbing.

BIS links payments research to crypto risk warnings

Even as it promotes research on tokenization, the BIS has maintained a cautious tone toward privately issued crypto instruments. The BIS has warned that stablecoins could create risks for the financial system and has urged faster progress on stablecoin regulation.

In addition, as previously reported by crypto.news last month, the BIS said crypto exchanges have operated as lightly regulated “shadow banks,” using customer deposits in ways that can increase leverage and contribute to large losses, including a $19 billion wipeout in 2025. 

In that assessment, BIS noted that “earn” and savings-style products sold by exchanges function more like unsecured loans because platforms rehypothecate user assets into margin lending, proprietary trading, and market making.