The Supreme Court of South Korea has ruled that Bitcoin stored in accounts on centralized cryptocurrency exchanges, such as Upbit and Bithumb can be legally seized by authorities under the country’s Criminal Procedure Act.
The ruling stems from a 2020 money laundering investigation where police seized approximately 55.6 Bitcoin (valued at around 600 million KRW, or roughly $413,000 at the time) from a suspect’s exchange account. The suspect challenged the seizure, arguing that Bitcoin held on exchanges does not qualify as a “physical object” under Article 106 of the Criminal Procedure Act, which traditionally allows seizure of evidence or items related to a criminal case.
Lower courts, including the Seoul Central District Court, upheld the seizure as lawful. The Supreme Court’s Second Division (led by Justice Kwon Young-jun) affirmed this on final appeal, rejecting the challenge and declaring the original action valid.
The Supreme Court emphasized that:
- Bitcoin qualifies as an “electronic certificate” or “electronic information” with independent manageability, tradability, and real economic value.
- Holders maintain practical control through private keys and account access, making it equivalent to property that can be subject to seizure.
- This extends beyond just physical objects, digital assets on centralized platforms are now explicitly within the scope of criminal enforcement.
This builds on prior precedents:
In 2021, it further classified virtual assets as property interests in fraud cases.
In 2018, the Supreme Court recognized Bitcoin as intangible property that can be confiscated if acquired through criminal activity.
Implications for Crypto Users and the Industry
This decision comes amid ongoing regulatory developments in South Korea, including discussions on expanded asset freeze powers and Phase-2 digital asset legislation.
Authorities can more easily freeze or seize exchange-held crypto in criminal probes (e.g., money laundering, fraud, or tax evasion), aligning South Korea with practices in the US and EU.
Self-custody push
The ruling applies specifically to custodial wallets on regulated exchanges, but non-custodial (self-held) wallets may face more enforcement challenges.
With major exchanges like Upbit and Bithumb holding billions in assets, this provides legal clarity but may encourage users to move toward decentralized options for greater control.
