- The CFTC rescinded a 1998 policy that barred settling lawsuits unless defendants agreed not to publicly deny the agency’s allegations.
- The policy change follows a similar move by the SEC in May, granting regulators more flexibility in settlements.
- Critics, including crypto firms, argued the rule restricted free speech, leading to its reversal.
- In a related move, the CFTC is now seeking to vacate a $5 million settlement with crypto exchange Gemini.
In a significant shift, the U.S. Commodity Futures Trading Commission announced it has rescinded a long-standing policy that prevented lawsuit settlements if defendants denied the agency’s allegations. The move was reported on Wednesday, marking the end of a rule first adopted in 1998.
The CFTC stated the policy may have created an incorrect impression that the Commission was shielding itself from criticism. This language mirrored that used by the SEC when it repealed a similar rule in May.
“For nearly three decades, the Commission has refused to settle cases unless the defendant promised not to publicly deny the Commission’s allegations,” said CFTC Chairman Mike Selig. He added that he was pleased to rescind the policy consistent with other government regulators.
Crypto companies subject to enforcement actions had criticized the rule, claiming it violated free speech rights. Consequently, the new policy grants the CFTC more flexibility when settling enforcement actions.
However, the agency will not enforce existing no-deny provisions and may still require defendants to admit certain facts. Meanwhile, the CFTC and SEC under the Trump administration have rolled back some crypto enforcement actions initiated previously.
On Thursday, the CFTC sought to vacate its $5 million settlement with Gemini, a case Chairman Selig claimed was politically targeted. Former CFTC head Tim Massad called the reversal “extraordinarily unusual.”
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