South Korea’s Supreme Court Rules on Seizability of Bitcoin on Exchanges

South Korea’s Supreme Court has made an important ruling, stating that Bitcoin stored on domestic exchanges like Upbit and Bithumb can be seized under the Criminal Procedure Act. This decision, reported by The Chosun Daily, clarifies the legal status of cryptocurrencies in relation to criminal investigations.

Key Takeaways

South Korea's Supreme Court ruled that Bitcoin on exchanges can be seized under the Criminal Procedure Act.
This decision clarifies the status of cryptocurrencies as seizable property during criminal investigations.
The ruling arose from a money laundering case involving the seizure of 55.6 Bitcoin.
Authorities are looking to enhance their ability to seize crypto holdings before suspects can move them.

South Korea's Top Court Rules Bitcoin on Exchanges Can Be Seized

The ruling, announced on December 11, addresses long-standing questions about whether cryptocurrencies held on trading platforms are considered property that can be seized in criminal cases. It also comes as South Korean authorities increase their efforts to regulate the crypto sector, imposing large fines on major exchanges and expanding their asset seizure capabilities.

Legal experts believe this ruling sets a precedent for how digital assets will be treated in future criminal investigations involving virtual currencies.

Court Confirms Bitcoin Qualifies for Seizure Under Criminal Law

The case that led to this ruling began in January 2020 when police seized 55.6 Bitcoin, worth about 600 million won, from a suspect in a money laundering investigation. The individual contested the seizure, claiming that Bitcoin in exchange accounts did not qualify as physical property that can be confiscated under Article 106 of the Criminal Procedure Act, which applies to items recognized as evidence in a case.

The Seoul Central District Court deemed the seizure lawful, and the Supreme Court’s Second Division, headed by Justice Kwon Young-jun, upheld this decision upon appeal. The court indicated that the Criminal Procedure Act permits the seizure of both physical items and electronic information. It categorized Bitcoin as an electronic token that can be independently managed, traded, and has significant economic value.

The justices pointed out that holders can control their Bitcoin transactions through private keys stored in electronic wallets, which establishes the necessary control for meeting seizure criteria. This ruling builds on earlier decisions by the Supreme Court, which had classified Bitcoin as intangible property with economic value subject to state seizure and recognized virtual assets in fraud cases as property interests.

Ruling Aligns with Regulatory Actions to Expand Seizure Authority

The Supreme Court's ruling aligns with ongoing efforts by the Financial Services Commission (FSC) to enhance their regulatory reach in cryptocurrency. They are considering a payment freeze system that would enable authorities to lock cryptocurrency accounts before any suspected illicit funds can be withdrawn. The current legal framework requires court warrants during prosecutions, which can result in delays that permit suspects to shift funds to private wallets or overseas exchanges.

This proposed system aims to imitate stock market regulations that were introduced with amendments to the Capital Markets Act in April 2025. For instance, in September, regulators froze 75 accounts associated with a stock manipulation case, successfully preventing the withdrawal of 40 billion won in profits.

Although the implementation of South Korea’s Virtual Asset User Protection Act, effective from July 2024, has enhanced the responsibilities of exchanges for monitoring suspicious activities, it lacks provisions for preemptive asset freezing.

Further legislation addressing stablecoins, market manipulation, and compliance issues is currently delayed as discussions between the Financial Services Commission and the Bank of Korea over stablecoin issuers continue.

In addition to regulatory enforcement, the FSC has intensified scrutiny of exchanges, imposing fines totaling billions of won. Korbit received a fine of 27.3 billion won for anti-money laundering violations, while Upbit was fined 35.2 billion won.

A legal expert in virtual asset legislation noted that this ruling clarifies the legal status of cryptocurrencies on exchanges, confirming they are subject to lawful seizure during investigations, which could help resolve various practical issues surrounding seizure searches in the crypto space.

Simultaneously, South Korea is taking steps to legitimize its cryptocurrency markets. Korea Exchange chairman Jeong Eun-bo announced plans to introduce cryptocurrency exchange-traded funds (ETFs) and to extend trading hours to 24/7, alongside lifting a seven-year venture capital funding prohibition for crypto companies.