- South Korea’s Supreme Court ruled that cryptocurrencies on exchanges can be seized under existing laws.
- The decision applies during criminal investigations for crimes such as money laundering, fraud, or embezzlement.
- Law-abiding users are unaffected, but the ruling closes loopholes with global crypto seizure standards.
South Korea’s Supreme Court has ruled that cryptocurrencies held on local exchanges can be seized under existing laws. This decision eliminates a long-standing legal gray area and changes how crypto assets are treated in criminal cases.
The ruling affects users of major exchanges like Upbit and Bithumb, which together hold over $33 billion in crypto. On January 8, the court decided that Bitcoin and other cryptocurrencies qualify as seizable property under the Criminal Procedure Act.
The case began with a 2020 money laundering investigation, during which authorities seized 55.6 BTC, worth about 600 million won (around $413,000 at the time), from a suspect’s exchange account. The defendant argued that Bitcoin could not be seized because it has no physical form.
The court disagreed, stating that Bitcoin is an electronic asset with economic value that can be owned, traded, and controlled, making it subject to legal seizure.
Building on Earlier Bitcoin Rulings
This ruling builds on earlier Supreme Court decisions. In 2018, the court held that Bitcoin, as an intangible asset with economic value, could be confiscated if obtained through criminal activity. Later rulings further recognized Bitcoin as a form of property relevant in fraud and financial crime cases.
The latest decision goes a step further by explicitly confirming that cryptocurrencies stored on centralized exchanges like Upbit and Bithumb can be seized during investigations, not just confiscated after convictions.
What This Means for Upbit and Bithumb Users
The ruling does not mean authorities can seize crypto at will. Seizures are only permitted during criminal investigations involving crimes such as money laundering, fraud, bribery, embezzlement, or tax evasion.
Under the clarified rules, prosecutors and police can request that exchanges freeze or transfer crypto linked to suspected criminal activity. Because exchanges are regulated, they are required to comply with these legal requests.
For law-abiding users, nothing changes in how they use Upbit or Bithumb. The ruling primarily creates clearer enforcement rules and makes it easier for authorities to track and recover illegal funds.
Is $33 Billion in Crypto Really at Risk?
Although South Korean exchanges hold more than $33 billion in crypto, those funds are not automatically at risk. Authorities can only seize assets when there is a clear legal basis connected to a specific investigation.
The ruling mainly closes a loophole that allowed suspects to claim that digital assets could not be seized. With this clarification, South Korea now aligns more closely with countries such as the United States and the United Kingdom, where courts already recognize digital assets as property that can be seized.
Related: South Korea’s Virtual-Asset Tax Plan May Face Another Delay Till 2027
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Source: https://coinedition.com/south-korea-supreme-court-rules-crypto-on-exchanges-can-be-seized/
