The U.S. Commodity Futures Trading Commission has eliminated a long-standing policy that prevented defendants in lawsuit settlements from publicly denying the agency’s claims. In its statement on Wednesday, the institution stated that the practice adopted in 1998 was canceled.
Justification for policy change
The CFTC said the policy may have created the false impression that the commission was trying to avoid criticism. In the statement, it was stated that this change would provide the institution with more room for maneuver in compromises in the sanctions processes.
CFTC Chairman Mike Selig said that for nearly three decades, the commission has settled cases only if defendants pledged not to publicly deny the agency’s allegations. Selig noted that removing this practice creates a framework that is more compatible with federal regulatory agencies.
Mike Selig explained that the commission had been asking the defendants to give up their right of public denial for reconciliation for many years, and that this approach was abandoned with the new decision.
Mini glossary: The CFTC is the federal agency that oversees commodity derivatives and futures markets in the United States. Some derivative products and market abuse claims related to crypto assets may also fall under the jurisdiction of this authority.
Criticisms of crypto companies
Some crypto companies, which face enforcement action by the CFTC or the U.S. Securities and Exchange Commission, have long criticized this rule. The companies argued that this approach limited freedom of expression.
The CFTC also said it would not enforce non-repudiation provisions in existing settlements. However, the institution stated that it may still require the acceptance of certain facts or legal responsibilities when reaching a compromise in some files.
Wider retreat in regulatory approach
During the Donald Trump period, CFTC and SEC withdrew some sanctions steps taken against crypto companies during the Joe Biden period. The latest change is seen as part of a broader reassessment of the regulatory approach in Washington.
In this context, the CFTC requested that the $ 5 million settlement made with the cryptocurrency exchange Gemini on Thursday be deemed null and void. Selig claimed that this file was targeted for political reasons.
While the CFTC requested the cancellation of the $5 million settlement with Gemini, there were evaluations from within the institution that this file was highlighted for political reasons.
Remarkable evaluation from the former president
Tim Massad, who served as CFTC chairman during the Barack Obama administration, said that he found the institution’s decision to reverse this compromise unusual. In his assessment on Friday, Massad stated that such a step was extremely unusual.
With the latest decision, the CFTC is expected to move to a more flexible framework in reconciliation processes. However, in which cases the institution will require additional acceptance conditions and how this approach will be reflected in ongoing cases in the crypto sector will become clearer in the coming period.
