South Korea’s top court has ruled that Bitcoin held on cryptocurrency exchanges can be seized under criminal law, reinforcing state authority over digital assets tied to investigations.
The decision came from the Supreme Court of South Korea in a re-appeal case linked to a money laundering probe. The case involved an individual known as Mr. A, who stored 55.6 Bitcoin on a domestic virtual asset exchange.
According to a local media report, investigators seized the Bitcoin in January 2020 during the inquiry. Mr. A challenged the action, arguing that assets on exchanges are not physical objects and should fall outside seizure rules.
Lower courts rejected that argument, and the Supreme Court upheld their judgments. The court said the Criminal Procedure Act allows seizure of both tangible objects and electronic information.
Court defines Bitcoin as property subject to seizure
In its ruling, the court stated that Bitcoin carries clear economic value. It said Bitcoin can be independently managed, traded, and controlled, which places it within the scope of lawful seizure.
The judges also addressed how Bitcoin is held on exchanges. They said users maintain practical control over their assets through access credentials, even when coins are stored on platforms.
Because of this control, the court said Bitcoin is not just a digital record. Courts or investigators can seize it as property.
Legal experts view the ruling as a firm reference point for future cases. It reduces uncertainty around whether exchange-held crypto can be treated as seizable property.
The decision builds on earlier court findings from 2018 and 2021. Those rulings already recognized Bitcoin as property with economic value when tied to crimes.
This case goes further by focusing on exchange custody. It confirms that storage on an exchange does not shield Bitcoin from legal action.
South Korea tightens crypto exchange oversight
The ruling arrives as South Korea tightens crypto oversight. Lawmakers are advancing the Phase Two Virtual Asset Law, which seeks to cap ownership concentration in major crypto exchanges.
The Financial Services Commission has proposed labeling huge exchanges as core market infrastructure. The proposal applies to platforms with more than 11 million users.
The plan would limit large shareholders to between 15 and 20% ownership. Exchanges can also be subject to qualification reviews similar to that applied in capital markets.
Enforcement measures have already been made by regulators. The Financial Intelligence Unit last month fined Korbit 2.73 billion won, or approximately $1.9 million.
The FIU alleged that Korbit broke anti-money laundering regulations. About 22,000 high-risk transactions and customer verification weaknesses were detected by inspectors.
The agency also gave warnings to the exchange and senior executives. The move indicated more rigid compliance failure monitoring.
Collectively, the legal decision and the regulatory actions signal a new development. The value of Bitcoin held on an exchange now is obviously falling under powers of seizure.
Meanwhile, the exchanges are subjected to more critical scrutiny regarding ownership and controls. South Korea is harmonizing enforcement of law with stricter crypto regulation.