NEW YORK, NY — On Thursday, prosecutors stated that a recent memo from the U.S. Department of Justice—which disbands the DOJ’s cryptocurrency unit and limits its enforcement focus on crypto-related matters—will not influence the prosecution of Do Kwon, co-founder and former CEO of Terraform Labs.
This memo, delivered on Monday by U.S. Deputy Attorney General Todd Blanche, conveyed that the DOJ will cease taking legal action against cryptocurrency exchanges, mixed services, or offline wallets for the activities of their users. Blanche instructed staff to refrain from pursuing criminal charges regarding federal securities or commodities laws unless specific conditions are met, particularly cases that necessitate the DOJ to determine whether a digital asset qualifies as a ‘security’ or a ‘commodity,’ provided there are other sufficient criminal charges available.
During a hearing on Thursday, U.S. District Court Judge Paul Engelmayer from the Southern District of New York questioned prosecutors about whether the memo would affect the charges against Kwon. These charges include two counts of commodities fraud, two counts of securities fraud, and five additional counts, such as wire fraud and conspiracy to commit fraud.
The prosecution responded that they currently have “no plans” to alter the charges against Kwon.
Kwon’s leading defense attorney, David Patton, partner at Hecker Fink LLP, informed Engelmayer that the memo’s content could potentially lead to some pre-trial motions from the defense, at least indirectly.
“I do think it could potentially be the subject of some pre-trial motions,” Patton remarked. He emphasized that the determination of whether the cryptocurrencies involved in the case are classified as securities could be significant.
In a related civil case filed last year by the U.S. Securities and Exchange Commission against Kwon and Terraform Labs, in which they were determined liable for fraudulent activities, another SDNY judge concluded that the tokens involved were indeed securities.
During the hearing, Engelmayer instructed both sides to notify him well ahead of the trial if they intend to ask him to comply with any prior rulings or findings from the SEC case.
Further pre-trial motions are anticipated to appear on the docket in July, and a third status conference has been set for June 12 at 11 a.m. in New York.
The commencement date for Kwon’s criminal trial has been postponed by three weeks, shifting from January 26, 2026, to February 17, 2026.
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