South Korean court rules: Bitcoin within exchanges "has economic value" and can be lawfully seized and confiscated

The South Korean Supreme Court recently made an important ruling regarding the legal classification of cryptocurrencies, clearly stating that Bitcoin stored in cryptocurrency exchange accounts qualifies as assets that can be lawfully seized and confiscated in criminal proceedings. This ruling not only responds to long-standing debates but also provides a significant reference standard for subsequent investigations, trials, and legislation.

Controversy over Money Laundering Cases: Can Police Seize Bitcoin Worth 600 Million KRW?

According to Chosun Ilbo, this decision by South Korea stems from a money laundering investigation. In January 2020, police seized 55.6 Bitcoins from the account of suspect A at an exchange, with a market value of approximately 600 million KRW (about 411,000 USD), which has since appreciated to 7.37 billion KRW (about 5.05 million USD).

Mr. A subsequently filed an objection, arguing that Article 106 of the Criminal Procedure Act only permits the seizure of “physical objects,” and since Bitcoin is merely digital information, it is not within the scope of seizure. Therefore, he requested the revocation of the seizure order. This claim was first rejected by the district court and then by the appellate court, ultimately leading to an appeal to the South Korean Supreme Court.

Supreme Court Ruling: Electronic Information Also Falls Within Seizure Scope

In its judgment, the Supreme Court explicitly stated: “The objects of seizure under criminal procedure law are not limited to tangible items but also include electronic information with property characteristics.”

The court believes that Bitcoin, as an independently manageable and tradable electronic token with tangible economic value, meets the criteria for seizure. Even if the assets are stored on an exchange, as long as the owner can practically control them through mechanisms like private keys, they are subject to seizure by courts and investigative authorities.

This ruling is also seen as an extension and supplement of existing judicial definitions. As early as 2018, the Supreme Court recognized Bitcoin as intangible property with economic value that could be confiscated in criminal contexts; in 2021, it further confirmed that Bitcoin constitutes property interests recognized under criminal law.

This case is the first to explicitly address the seizure of crypto assets “within exchange accounts,” filling a practical gray area, helping to resolve disputes between law enforcement and judicial practice, and influencing future legislation and investigations.

South Korea Quietly Tightens Cryptocurrency Regulations: Strengthening Control over New VASP Entrants

It is noteworthy that South Korea’s recent approach to crypto regulation appears increasingly conservative. On one hand, the Financial Intelligence Unit (FIU) has slowed down its review process for new Virtual Asset Service Providers (VASP), with a noticeable decline in approvals and significantly extended review times, creating a barrier to entry.

On the other hand, for established large exchanges, regulators adopt a “penalize first, then allow” approach, using hefty fines and correction procedures to complete license renewals, indicating a shift in regulatory focus toward risk management mechanisms.

(Upbit Hacked! South Korea Calls for Legislation to Treat Exchanges Like Banks, Compensating Users Even Without Fault)

International Trends: Digital Assets Gradually Incorporated into Traditional Legal Frameworks

In recent years, many countries have gradually incorporated crypto assets into their property definitions through case law or legislation. For example, the UK recently passed legislation explicitly recognizing digital assets as property, applicable in legal contexts such as theft, inheritance, and bankruptcy.

Against the backdrop of frequent cryptocurrency crime cases and tightening regulation, South Korea’s Supreme Court decision also aligns with international regulatory trends.

This article South Korea Supreme Court Ruling: Bitcoin “Has Economic Value” in Exchanges and Can Be Lawfully Seized and Confiscated first appeared on Chain News ABMedia.