DOJ Won’t Drop Charges Against Do Kwon Despite New Crypto Policy

U.S. prosecutors confirmed Thursday that they have no intention of altering the criminal case against Terraform Labs founder Do Kwon, despite a new policy memo from the Department of Justice advising restraint in prosecuting crypto firms.

Deputy Attorney General Todd Blanche issued the internal guidance earlier this week, instructing DOJ staff to avoid pursuing enforcement actions that effectively impose regulatory obligations on crypto companies—such as exchanges and mixers—through criminal charges. Blanche added that regulatory oversight of digital assets should remain with President Trump’s designated financial agencies, not through the courts.

However, at a pre-trial hearing in New York, federal prosecutors told the judge that Blanche’s directive would not prompt any changes to the charges against Kwon “at this time,” according to reporting by CoinDesk and Law360.

Kwon is facing a sweeping criminal case that includes charges of wire fraud, commodities fraud, securities fraud, and conspiracy to commit money laundering. If convicted on all counts, he could be sentenced to as much as 130 years in prison.

David Patton, Kwon’s defense attorney, indicated that DOJ’s fresh crypto stance may influence future pre-trial arguments. “It may or may not be directly related to the memo,” he said, suggesting that the defense could file motions challenging aspects of the case.

The court postponed the trial’s start date from Jan. 26 to Feb. 17, 2026. The next pre-trial conference is set for June 12, 2025.

The government’s filing states the latest batch of evidence includes data from warrants on various electronic accounts and materials from third-party entities and individuals. This comes after prosecutors already sent Kwon’s team 600 gigabytes of data, including information from four of his cellphones, emails from personal and business accounts, and details on his extradition from Montenegro.

Kwon was arrested in Montenegro in March 2023 on passport forgery charges. After over a year of legal battles, he was extradited to the U.S. to face criminal charges.

U.S. prosecutors allege that Kwon used “manipulative and deceptive techniques” to mislead investors, business partners, and regulators, creating what they described as a “financial world built on lies.”

Kwon’s extradition from Montenegro followed months of legal debates over whether he should face trial in South Korea or the U.S. He was arrested in Montenegro in March 2023 on passport forgery charges.

In addition to the criminal case, Kwon also faces civil charges brought by the U.S. Securities and Exchange Commission (SEC). The SEC accused Kwon and Terraform of violating federal securities laws by engaging in fraud connected to the buying and selling of Terraform securities.