South Korea’s Top Court Rules Bitcoin on Exchanges Can Be Seized - A Landmark Ruling for Crypto Enforcement
Seoul just handed authorities a powerful new tool. The nation's highest court has ruled that Bitcoin held on exchanges constitutes property that can be legally seized—a decision that rips through the long-debated question of crypto's legal status.
From Digital Asset to Seizable Property
The ruling cuts straight to the core. It bypasses abstract debates about Bitcoin's nature, treating it as a tangible financial asset under the law. This sets a clear precedent: if you owe money, your exchange-held crypto isn't off-limits anymore.
The Enforcement Mechanism Unlocks
Prosecutors and tax collectors just got a major upgrade. The decision effectively hands them the keys to freeze and confiscate digital wallets on regulated platforms. It transforms crypto from an enforcement gray zone into actionable territory—no more hiding behind technological novelty.
Market Implications: Clarity with Strings Attached
For the industry, it's a double-edged sword. Regulatory clarity often boosts institutional confidence, but this particular brand of clarity comes with handcuffs attached. Exchanges now face increased operational complexity, forced to comply with seizure orders that were previously legally murky.
The ruling injects a heavy dose of traditional finance reality into the crypto ecosystem—proving once again that when the state wants its cut, it finds a way to collect, digital or not. A cynical take? The old rules always catch up, they just need a court order to download the latest software update.
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 “.”
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.
South Korea may introduce preemptive crypto account freezes to prevent price manipulation and illicit gains. #SouthKorea #MarketManipulationhttps://t.co/WS9qDxcOd2
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.
South Korea’s Financial Intelligence Unit fines crypto exchange Korbit $1.89M over violations.#Crypto #Regulation https://t.co/fqGj3jWHWF
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.
