Prosecutors Say Justice Department Cryptocurrency Memo Doesn't Affect Do Kwon's Criminal Case
Prosecutors informed a New York judge on Thursday that they do not intend to change the charges against Kwon in light of the memo.
Author: Cheyenne Ligon | Edited by: Nikhilesh De Updated: April 10, 2025 6:14 PM Published: April 10, 2025 5:05 PM
What you need to know:
- A recent Justice Department memo clarifying the agency's crypto enforcement priorities will not impact the criminal prosecution of Terraform Labs co-founder Do Kwon.
- Kwon's trial has been postponed to February 17, 2026 due to graphic conflicts.
NEW YORK, N.Y. — A recent U.S. Justice Department memo shutting down the Justice Department's crypto unit and clarifying its cryptocurrency-related enforcement priorities will have no impact on the criminal prosecution of Terraform Labs co-founder and former CEO Do Kwon, prosecutors said Thursday.
A memo sent Monday evening by Deputy Attorney General Todd Blanche said the Justice Department will no longer pursue cryptocurrency exchanges, mixing services, or offline wallets for the actions of their end users. Blanche told staff not to pursue criminal charges for any violations of federal securities or commodities laws, except in specific cases where the charges “would require [the Justice Department] to litigate whether a digital asset is a ‘security’ or a ‘commodity’” and there is an adequate alternative criminal charge.
During a hearing Thursday, U.S. District Court Judge Paul Engelmayer of the Southern District of New York (SDNY) asked prosecutors whether Blanche's memo would impact the charges against Kwon, which include two counts of commodities fraud and two counts of securities fraud, as well as five other charges, including wire fraud and conspiracy to defraud.
Prosecutors told Engelmayer they currently have “no plans” to change the charges against Kwon.
David Patton, Kwon's lead attorney and a partner at Hecker Fink LLP, told Engelmayer that the contents of Blanche's memo could, at least indirectly, lead to some pre-trial motions by the defense.
“I do think that this could potentially be the basis for some pretrial motions,” Patton said. “It may or may not be directly related to the memo.” Patton clarified that questions about whether the cryptocurrencies mentioned in the case were securities or not could be relevant.
In a separate civil case brought by the U.S. Securities and Exchange Commission (SEC) against Kwon and Terraform Labs last year, in which Kwon and his company were found guilty of fraud, a different judge in the Southern District of New York found that the tokens at issue in the case were, in fact, securities.
During Thursday's hearing, Engelmayer asked both the prosecution and defense to notify him in advance of whether they planned to ask him to comply with any court orders or findings in the SEC case.
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