How the GENIUS Act’s Latest Moves Could Flip Do Kwon’s Courtroom Fate
Legislative shockwaves hit crypto courtrooms as the GENIUS Act gains momentum—just as Terra’s disgraced founder fights extradition. Could this be his get-out-of-jail-free card? Or just another delay tactic funded by vaporized LUNA holdings?
Behind the scenes: D.C. lobbyists are scrambling to attach crypto-friendly amendments to the bill. Meanwhile, prosecutors sharpen their knives—this legal showdown just got a whole lot messier.
Bonus jab: Nothing unites lawmakers faster than the smell of fresh compliance revenue—except maybe seeing a billionaire perp-walked through Manhattan.
TLDR
- The GENIUS Act has passed the US Senate and may influence how courts handle stablecoin-related charges.
- Do Kwon is facing nine felony charges in US federal court, including securities and commodities fraud.
- Judge Paul Engelmayer indicated that the GENIUS Act could affect the legal interpretation of Kwon’s charges.
- The depegging of TerraUSD in 2022 led to a major collapse in the crypto market and legal action against Terraform Labs.
- Kwon has pleaded not guilty and is currently held without bail as he awaits trial scheduled for January 2026.
The ongoing progress of new US crypto laws may influence the criminal case against Terraform Labs co-founder Do Kwon. Legal developments, including the GENIUS Act, are raising questions about the applicability of existing securities laws. With multiple bills under consideration, courts may reassess charges related to algorithmic stablecoins and token-based ecosystems.
GENIUS Act Could Reshape Kwon Case
The GENIUS Act, passed by the Senate on June 17, focuses on regulations for payment stablecoins. It now awaits review and a potential vote in the House of Representatives, where further debate continues. If enacted, the bill could redefine how stablecoins are treated under US crypto laws.
Judge Paul Engelmayer presides over Kwon’s federal case in the Southern District of New York. During a recent status conference, he referenced the GENIUS Act while evaluating the securities fraud charges. Prosecutors and defense attorneys acknowledged the bill’s potential impact on the indictment.
The GENIUS Act may determine whether algorithmic stablecoins like TerraUSD fall under securities regulations. As US crypto laws evolve, courts could adjust the legal framework applied to Kwon’s conduct. This review might influence the nine felony charges he faces, including securities and commodities fraud.
TerraUSD Depeg and Legal Fallout Drive Scrutiny
TerraUSD, an algorithmic stablecoin, lost its peg to the US dollar in 2022, which contributed to a significant market collapse. The resulting losses drew legal action from both South Korean and US authorities against Terraform Labs and its leadership. Kwon was later arrested in Montenegro in 2023 on unrelated charges.
Following extradition to the United States in December 2023, Kwon was formally charged with nine criminal offenses. These include securities fraud, wire fraud, market manipulation, and money laundering under existing US crypto laws. He has pleaded not guilty and remains in custody without bail.
In 2024, a civil jury found Kwon and Terraform Labs liable for defrauding investors. Judge Engelmayer is now reviewing whether civil findings can affect the criminal proceedings. The GENIUS Act and related legislation may shift that interpretation within the evolving legal landscape of US crypto laws.
STABLE Act Could Shift Token Rules
The House is also reviewing the STABLE Act, a companion bill addressing transparency in digital assets. Together with the GENIUS Act, these bills may guide future regulatory enforcement. Changing US crypto laws could alter how agencies classify digital tokens like LUNA.
Legal experts argue that updates in legislation might affect how criminal intent is established in such cases. Similar arguments appeared in other high-profile crypto cases, such as Braden Karony’s. Courts may reconsider indictments based on revised definitions embedded in US crypto laws.
