In a Wednesday status conference, the judge overseeing the Terraform Labs co-founder’s case has signaled that the GENIUS Act could potentially impact the case. Do Kwon is facing criminal charges in US federal court, and the judge’s comments suggest that the legislation could alter the trajectory of the trial.
According to reports, Kwon’s lawyers and prosecutors met for a status conference before Judge Paul Engelmayer in the US District Court for the Southern District of New York. The judge said he was “mindful of the GENIUS Act.”
The GENIUS Act, which stands for the Guiding and Establishing National Innovation for US Stablecoins, was passed by the US Senate on June 17. However, it still faces a possible vote in the House of Representatives before US President Donald Trump decides to sign the bill into law.
The legislation, targeting regulations for payment stablecoins, could affect Kwon’s charges related to the TerraUSD (USDT) algorithmic stablecoin and the platform’s LUNA token.
The GENIUS Act could be law at the same time as Do Kwon’s trial
The Senate has passed the GENIUS Act and is now being held by the House of Representatives. The bill’s companion, the Stablecoin Transparency and Accountability for a Better Ledger Economy, or STABLE Act, is also moving through the House as both chambers consider legislation for digital asset market structure.
When both houses agree on the same text, it is sent to President Trump to be signed. The president has 10 days to sign it into law, excluding Sundays. If he doesn’t, it will become law without his or her name.
Once the law is passed, agencies like the Federal Reserve, the OCC, the FDIC, the CFTC, and others have 180 days to develop final rules covering oversight, reserve requirements, audits, licensing, disclosures, and how to implement the law.
Therefore, the GENIUS Act timeline is expected to be: House vote by late July, Conference committee if needed late July or early August, final congressional approval by mid-August, presidential signature by late August, and rule-making approximately Feb 2026. This could also come earlier, before Do Kwon’s trial.
Do Kwon’s TerraUSD Stablecoin collapse
Do Kwon, co-founder of Terraform Labs, appeared in a US court on Jan. 2, 2025. He pleaded not guilty to charges stemming from the collapse of the Terra ecosystem, which led to a loss of $40 billion. The charges relate to the downfall of TerraUSD (USDT), an algorithmic stablecoin, and its linked cryptocurrency, LUNA, which crashed in May 2022.
The US prosecutors say that Kwon lied to investors about how stable and useful the Terra blockchain and its products, such as UST, were. According to them, Kwon’s acts were part of a plan to trick investors into thinking Terra was a real, working decentralized financial system.
In addition, the US Securities and Exchange Commission (SEC) also sued Kwon and Terraform Labs for fraud in a civil case. In June 2024, a $4.47 billion deal was reached. Terraform Labs has since filed for bankruptcy.
However, when the UST stablecoin failed, Terra’s ecosystem fell apart, causing investors to lose a lot of money. The collapse played a major role in the broader crypto market downturn, also contributing to the collapse of FTX.
At first, Kwon fought extradition because he wanted to be sent to South Korea, where penalties for financial crimes are usually less harsh. After considering how serious the charges were and what part the U.S. would play in his case, the Montenegrin government decided to send him back to the US On December 31, 2024, he was sent to the United States for custody. The trial is set for February 2026.
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