DOJ Crypto Enforcement Memo Has No Bearing on Do Kwon’s Criminal Case, Prosecutors Say

NEW YORK, NY — A latest U.S. Department of Justice workers memo dismantling the DOJ’s crypto unit and narrowing the scope of its crypto-related enforcement priorities could have no impression on the prosecution of Terraform Labs co-founder and former CEO Do Kwon, prosecutors mentioned Thursday.

The memo, despatched Monday night by U.S. Deputy Attorney General Todd Blanche, knowledgeable workers that the DOJ would now not be pursuing prosecution in opposition to crypto exchanges, mixing companies, or offline wallets for the acts of their finish customers. Blanche advised workers to not criminally cost any violations of federal securities or commodities legal guidelines, besides underneath particular circumstances, in instances the place the costs would “require the [DOJ] to litigate whether a digital asset is a ‘security’ or a ‘commodity’” and there may be an enough different felony cost.

During a listening to on Thursday, U.S. District Court Judge Paul Engelmayer of the Southern District of New York (SDNY) requested prosecutors whether or not Blanche’s memo would have any impression on the costs in opposition to Kwon, which embrace two counts of commodities fraud and two counts of securities fraud, in addition to 5 different prices together with wire fraud and conspiracy to defraud.

The prosecution advised Engelmayer that they’ve “no plans” to vary their prices in opposition to Kwon presently.

David Patton, Kwon’s lead lawyer and a companion at Hecker Fink LLP, advised Engelmayer that the contents of Blanche’s memo may — not less than not directly — result in some pre-trial motions from the protection.

“I do think it could potentially be the subject of some pre-trial motions,” Patton mentioned. “It may or may not be directly related to the memo.” Patton specified that the questions of whether or not the cryptocurrencies concerned within the case had been securities or not might be related.

In a separate civil case introduced by the U.S. Securities and Exchange Commission (SEC) in opposition to Kwon and Terraform Labs final 12 months, during which Kwon and his firm had been discovered to be chargeable for fraud, one other SDNY choose discovered that the tokens concerned within the case had been, in truth, securities.

During Thursday’s listening to, Engelmayer advised each the prosecution and the protection to tell him properly upfront of the trial in the event that they deliberate to request that he adhere to any of the rulings or findings made by the courtroom within the SEC case.

The subsequent batch of pre-trial motions are anticipated to hit the docket in July, and a 3rd standing convention has been scheduled for June 12 at 11 a.m. in New York.

Due to scheduling challenges, the beginning date for Kwon’s felony trial has been pushed again three weeks from January 26, 2026 to February 17, 2026.

Read extra: Do Kwon’s Criminal Trial Set for 2026 as Lawyers Deal With ‘Massive’ Trove of Evidence