The ongoing legal proceedings against Do Kwon, co-founder of Terraform Labs, may be impacted by potential changes in US cryptocurrency laws. Kwon, who is currently facing a series of criminal charges in a US federal court, might see amendments in his indictment due to some bills being considered in the US Congress.
As per Inner City Press, a meeting between the prosecutors and Kwon’s lawyers took place in the US District Court for the Southern District of New York before Judge Paul Engelmayer. The judge indicated his consideration of the GENIUS Act, which could potentially influence the securities fraud charges against Kwon.
The GENIUS Act, an acronym for Guiding and Establishing National Innovation for US Stablecoins, cleared the US Senate on June 17. However, it awaits a possible vote in the House of Representatives before a decision from US President Donald Trump on its enactment.
The legislation, which aims at regulating payment stablecoins, might impact Kwon’s charges related to the TerraUSD (UST) algorithmic stablecoin and LUNA, the platform’s token. In 2022, the UST by Terra significantly deviated from its peg to the dollar, leading to a system-wide crash. This event sparked legal action against Kwon and other executives by authorities in the US and South Korea.
In 2023, Kwon was arrested in Montenegro on unrelated charges. After several court delays, he was extradited to the US in December to stand trial on nine felony counts, including securities fraud, commodities fraud, and more. Kwon has maintained his innocence throughout and is being held without bail. His criminal trial is projected to start in January 2026.
In a separate civil case in 2024, Terraform Labs and Kwon were found guilty of defrauding investors by a jury. Judge Engelmayer is considering if the civil case rulings will have any bearing on Kwon’s ongoing criminal case.
The GENIUS Act, after passing the Senate, is currently under consideration in the House of Representatives. Its companion bill, the STABLE Act, is also under review. These bills may significantly reshape how US financial regulators and authorities approach digital asset-related cases.
