US CFTC Scraps Policy Barring Settlements with Defendants Denying Allegations

The US Commodity Futures Trading Commission has rescinded a long-standing policy that prevented it from accepting a lawsuit settlement if the defendant denied the agency’s allegations.

The CFTC said on Wednesday that it scrapped the policy, first adopted in 1998, because it “may have created an incorrect impression that the Commission is trying to shield itself from criticism.”

The language was similar to that provided by the US Securities and Exchange Commission when it rescinded a similar policy in May.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,” CFTC Chairman Mike Selig said. “I am pleased that we are rescinding the no-deny policy consistent with regulators throughout the government.”

Crypto companies that have faced enforcement action by the CFTC or SEC have criticized the rule, claiming it restricted their right to free speech.

Source: CFTC

The CFTC said the policy change now gives it more flexibility when settling enforcement actions.

However, it will not enforce existing no-deny provisions and could still require some defendants to admit certain facts or liabilities when settling enforcement actions.

Under the Trump administration, the CFTC and SEC have rolled back enforcement actions taken against crypto companies that were launched under the Biden administration.

On Thursday, the CFTC sought to vacate its $5 million settlement with crypto exchange Gemini, a case that Selig claimed was “politically targeted.”

Tim Massad, who headed the CFTC under the Obama administration, told Cointelegraph on Friday that the agency’s choice to reverse the settlement was “extraordinarily unusual.”