A federal judge overseeing the criminal case against Terraform Labs co-founder Do Kwon highlighted how recent U.S. legislation, specifically the GENIUS Act, may impact the ongoing legal battle. Kwon faces nine felony charges, including securities and commodities fraud, relating to the 2022 collapse of TerraUSD (UST), an algorithmic stablecoin central to the case.
The GENIUS Act, which successfully passed the U.S. Senate in June 2025 and is awaiting a House vote, aims to establish a regulatory framework for payment stablecoins. Judge Paul Engelmayer indicated during a federal court hearing that this legislation could reshape the interpretation of charges against Kwon, potentially affecting how algorithmic stablecoins like UST are classified under securities laws.
Alongside the criminal case, which follows Kwon's 2023 arrest and extradition on unrelated passport forgery charges, a civil jury previously found Kwon and Terraform Labs liable for fraud. The judge is currently evaluating the influence of those civil findings on the criminal proceedings amid these evolving legal contexts.
Further regulatory developments include the STABLE Act, presently under review in the House alongside the GENIUS Act, focusing on transparency and oversight of stablecoins. These legislative efforts collectively could alter enforcement by agencies such as the SEC and CFTC concerning digital assets.
The unfolding legal landscape raises significant questions about the future handling of stablecoin-related crimes. Kwon’s defense contests that the civil ruling should not dictate criminal trial outcomes. The case's resolution awaits a trial scheduled for January 2026, with Kwon continuing to plead not guilty and held without bail.