CFTC bid to vacate order against Winklevoss' crypto exchange 'very unusual': ex-agency chief

The move by the Commodity Futures Trading Commission to vacate a consent order against the cryptocurrency exchange company Gemini Trust is "very unusual," a former CFTC chair told CNBC's "Squawk on the Street" on Thursday.

Tim Massad, the former chair, also said he did not know details of the CFTC's case against Gemini, which was founded by the Winklevoss twins, because it came after his tenure at the agency, but noted that during his tenure, the CFTC's staff "only brought cases that were strong."

The CFTC on Wednesday asked a New York federal court judge to vacate the January 2025 order against Gemini, which included a $5 million penalty and an injunction that barred the company from making false statements to the agency. The order was implemented in the final weeks of President Joe Biden's administration, and related to false statements that Gemini made in the second half of 2017 to the CFTC about a bitcoin futures contract.

The CFTC is now run by Michael Selig, an appointee of President Donald Trump, whose 2024 election campaign received donations from the twins, Tyler and Cameron Winklevoss.

The $5 million already paid by Gemini would not be returned to the company if a judge signs off on the request that the consent order be lifted, according to the CFTC.

"What I will say is that it's very unusual for the CFTC to do this, to basically seek to vacate the judgment in a case that you brought," Massad told CNBC.

"And the second thing I would say is, in my experience, the CFTC enforcement division was very professional and acted with integrity and care," he said.

"There were a lot of people who were terrific public servants who made decisions based on the law and the facts, and they only brought cases that were strong on the merits."

Avi Perry, an attorney who represents Gemini in the CFTC case, told CNBC in a statement,"The facts speak for themselves. This case should have never been brought, and we are thankful that the CFTC has joined us in seeking to right this wrong."

The CFTC, in a statement on Wednesday, said that it had decided to seek a withdrawal of the consent order after "a comprehensive review" of the investigation led to the conclusion that "the complaint should not have been filed — and would not have been under current enforcement standards."

"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 agency said.

"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."

— CNBC's Lora Kolodny contributed to this article.