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

South Korea’s Supreme Court has issued its first ruling, establishing that Bitcoin held on domestic exchanges such as Upbit and Bithumb can be legally seized under the Criminal Procedure Act, according to a local report from The Chosun Daily.

The December 11 decision resolves years of legal ambiguity around whether cryptocurrencies stored on trading platforms constitute seizable property during criminal investigations.

The ruling comes as South Korean authorities accelerate enforcement across the crypto sector, imposing billions of won in fines on major exchanges while preparing expanded asset seizure powers.

Legal experts say the precedent clarifies the status of digital assets in criminal cases and will guide future investigations involving virtual currencies.

Court Confirms Bitcoin Meets Seizure Standards Under Criminal Law

The case originated in January 2020, when police confiscated 55.6 Bitcoin, valued at approximately 600 million won, from an individual under investigation for money laundering.

The suspect challenged the seizure, arguing that Bitcoin held in exchange accounts did not qualify as physical property subject to confiscation under Article 106 of the Criminal Procedure Act, which limits seizures to evidence or items “recognized as related to the case.”

After the Seoul Central District Court upheld the seizure as lawful, the Supreme Court’s Second Division, led by Justice Kwon Young-jun, affirmed that ruling on appeal.

The court stated that seizure targets under the Criminal Procedure Act encompass both tangible objects and electronic information, with Bitcoin qualifying as “an electronic token with the ability to be independently managed, traded, and substantially controlled in terms of economic value.“

The justices noted that Bitcoin management and trading within exchanges can be practically controlled by holders through private keys stored in electronic wallets, establishing sufficient control to meet seizure requirements.

The decision builds on the Supreme Court’s 2018 ruling that classified Bitcoin as intangible property with economic value subject to state confiscation, and its 2021 judgment recognizing virtual assets as property interests in fraud cases.

Ruling Arrives as Regulators Expand Seizure Authority

The Supreme Court’s clarification coincides with proposals from the Financial Services Commission to implement a payment freeze system that would allow authorities to lock crypto accounts before suspected criminal proceeds are withdrawn.

Officials told local media in November that current rules require court warrants during the prosecution phase, creating delays that allow suspects to move funds into private wallets or overseas platforms beyond regulatory reach.

The proposed mechanism would mirror stock market controls introduced under the April 2025 amendments to the Capital Markets Act.

In September, regulators froze 75 accounts linked to a 100 billion won stock manipulation scheme, preventing withdrawal of 40 billion won in realized and unrealized profits.

FSC members cited that case as evidence that the approach could work in crypto markets, where assets are even easier to conceal once they leave regulated platforms.

South Korea’s Virtual Asset User Protection Act, which took effect in July 2024, strengthened exchange obligations to monitor suspicious activity but did not grant preemptive asset freeze powers.

A second legislative phase addressing stablecoins, market abuse, and enforcement gaps remains stalled in 2026 as the Financial Services Commission and Bank of Korea dispute whether stablecoin issuers should be bank-led consortia.

Beyond trading enforcement, authorities are tightening compliance across exchanges.

The Financial Intelligence Unit imposed a 27.3 billion won fine on Korbit in December following 22,000 anti-money laundering violations, after earlier sanctions against Upbit totaling 35.2 billion won.

Bithumb, Coinone, and GOPAX remain under review, with total sector fines expected to reach hundreds of billions of won.

A lawyer experienced in virtual asset litigation told The Chosun Daily the ruling “clarifies the legal nature of coins stored and traded on virtual asset exchanges and specifies that they can be lawfully seized during investigations,” adding that it should “resolve practical controversies and doubts related to seizure searches of exchanges.“

Amid all these, South Korea has simultaneously advanced initiatives to legitimize crypto markets.

Korea Exchange chairman Jeong Eun-bo announced plans earlier this month to launch crypto ETFs and extend trading hours to 24/7 operations, while the government also recently abolished a seven-year venture capital funding ban for crypto firms.

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