New York, NY – a recent United States justice department Staff memo Removing the DOJ’s crypto unit and rotating the scope of crypto-related crypto priorities has no effect on the co-founder of terraform labs and former CEO Do Kwon, prosecutors said Thursday.
The memo, sent Monday on the eve of US representatives Todd Blanche, informs staff that the DOJ will no longer pursue prosecuting against crypto exchanges, mixing services, or offline wallets for the works of their end users. Blanche told staff not to charge any violations of federal security or commodity laws, except under specific circumstances, in cases where the charges “require (DOJ) to litigate if a digital possession is a ‘security’ or a ‘commodity'” and there is a sufficient alternative criminal charge.
During the hearing on Thursday, the US District Court Judge Paul Engelmayer of the Southern District of New York (SDNY) asked prosecutors if Blanche’s memo would have an impact on charges against Kwon, which included two numbers of goods fraud and two number of security frauds, as well as five other charges including wire fraud and defrauding defraud.
The prosecution told Engelmayer that they had no “plans” to change their charges against Kwon at this time.
David Patton, Kwon’s leading lawyer and a partner at Hecker Fink LLP, told Engelmayer that Blanche’s memo contents could-at least indirectly-led some pre-trial motions from defense.
“I think it could be the subject of some pre-trial motions,” Patton said. “May or may not be directly related to the memo.” Patton has determined that the questions whether the cryptocurrencies involved in the case are security or cannot be relevant.
In a separate civil case brought by the US Securities and Exchange Commission (SEC) against Kwon and Terraform Labs last year, where Kwon and his company found to be liable for fraudAnother SDNY judge found that the tokens involved in the case were, in fact, security.
At Thursday hearing, Engelmayer said in both prosecution and defense to inform him in advance of the trial if they planned to ask him to comply with any of the decisions or findings made by the court in the case of the SEC.
The next batch of pre-trial motions is expected to hit the docket in July, and a third conference status is scheduled for June 12 at 11am in New York.
Due to the scheduling of the challenges, the start date for Kwon’s criminal trial was pushed back three weeks from January 26, 2026 to February 17, 2026.
Read more: Was Kwon’s criminal trial for 2026 while lawyers dealt with the ‘massive’ trove of evidence
