NEW YORK, NY — A current U.S. Division of Justice employees memo dismantling the DOJ’s crypto unit and narrowing the scope of its crypto-related enforcement priorities may have no influence 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 Legal professional Common Todd Blanche, knowledgeable employees that the DOJ would now not be pursuing prosecution towards crypto exchanges, mixing companies, or offline wallets for the acts of their finish customers. Blanche instructed employees to not criminally cost any violations of federal securities or commodities legal guidelines, besides beneath particular circumstances, in instances the place the costs would “require the [DOJ] to litigate whether or not a digital asset is a ‘safety’ or a ‘commodity’” and there’s an sufficient various legal cost.
Throughout a listening to on Thursday, U.S. District Court docket Choose Paul Engelmayer of the Southern District of New York (SDNY) requested prosecutors whether or not Blanche’s memo would have any influence on the costs towards 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 instructed Engelmayer that they’ve “no plans” to alter their prices towards Kwon right now.
David Patton, Kwon’s lead lawyer and a accomplice at Hecker Fink LLP, instructed Engelmayer that the contents of Blanche’s memo may — no less than not directly — result in some pre-trial motions from the protection.
“I do assume it may probably be the topic of some pre-trial motions,” Patton mentioned. “It might or will not be immediately associated to the memo.” Patton specified that the questions of whether or not the cryptocurrencies concerned within the case have been securities or not might be related.
In a separate civil case introduced by the U.S. Securities and Change Fee (SEC) towards Kwon and Terraform Labs final yr, by which Kwon and his firm have been discovered to be accountable for fraud, one other SDNY choose discovered that the tokens concerned within the case have been, in actual fact, securities.
Throughout Thursday’s listening to, Engelmayer instructed each the prosecution and the protection to tell him nicely 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 following 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.
As a result of scheduling challenges, the beginning date for Kwon’s legal trial has been pushed again three weeks from January 26, 2026 to February 17, 2026.
Learn extra: Do Kwon’s Prison Trial Set for 2026 as Attorneys Deal With ‘Large’ Trove of Proof
