CFTC Ends No-Deny Settlement Rule, Following SEC's Lead

Key Points

Table of Contents

The CFTC eliminated its no-deny settlement requirement that existed since 1998.
Officials acknowledged the policy might have suggested the agency sought protection from public criticism.
Chairman Mike Selig emphasized the change brings the CFTC in line with other federal agencies.
The agency will avoid retroactively enforcing no-deny provisions in settled agreements.
Simultaneously, the CFTC requested to void its $5 million agreement with Gemini.

The Commodity Futures Trading Commission of the United States has terminated its decades-old no-deny settlement requirement. This policy shift permits defendants to resolve enforcement matters while retaining the right to publicly contest the agency’s claims. The action mirrors a parallel decision made by the Securities and Exchange Commission earlier this year.

Commission Eliminates 27-Year Settlement Restriction

The CFTC implemented the no-deny requirement in 1998 and maintained it for approximately 27 years. Under this framework, defendants could settle cases only if they refrained from publicly challenging the commission’s allegations. Agency officials now acknowledge the policy may have conveyed unintended messages about regulatory intentions.

Chairman Mike Selig revealed the policy reversal through an official announcement on Wednesday. He explained that the commission previously declined settlement offers when defendants wanted to dispute allegations publicly. “I am pleased that we are rescinding the no-deny policy consistent with regulators throughout the government,” Selig stated.

According to the agency, the requirement potentially implied an attempt to avoid public scrutiny. The commission chose to harmonize its enforcement approach with other federal regulatory bodies. The SEC abandoned a comparable restriction in May through similar reasoning.

The CFTC indicated the policy elimination provides greater latitude in settling enforcement proceedings. Officials clarified that existing settlement agreements will remain unaffected by new enforcement of no-deny terms. The agency retains discretion to demand admissions of particular facts or liability in specific circumstances.

Cryptocurrency companies previously challenged this policy as an infringement on expression rights. These firms maintained that settlements unfairly prevented them from publicly defending their positions. The policy elimination responds to these objections while maintaining regulatory enforcement capabilities.

Administrative Review and Gemini Agreement Withdrawal

Federal regulators under the current administration have reexamined enforcement actions initiated during the previous administration. Both the CFTC and SEC have reassessed multiple cryptocurrency-focused enforcement proceedings. The agencies have withdrawn certain actions as components of this comprehensive review.

On Thursday, the CFTC filed to nullify a $5 million settlement reached with Gemini. Chairman Selig characterized the enforcement action as “politically targeted” during public statements. This maneuver represents a significant shift from the agency’s earlier stance on the settlement.

Tim Massad, who served as CFTC chairman during the Barack Obama presidency, offered perspective on the withdrawal. He informed Cointelegraph the decision was “extraordinarily unusual.” His assessment underscored how rarely finalized settlements face reversal.

The CFTC verified it submitted formal documentation to withdraw the Gemini agreement. The agency provided limited additional information regarding the case in official communications. No updated resolution schedule has been announced by the commission.

Both the policy termination and the Gemini filing took place during the same timeframe. The CFTC presented these measures as elements of its extensive enforcement practice examination. The agency has provided no additional guidance following its public announcements.

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