Courts in South Korea Determine That Bitcoin on Exchanges Is Subject to Seizure

South Korea’s Supreme Court has made its initial ruling, determining that Bitcoin held on local exchanges like Upbit and Bithumb can be legally seized under the Criminal Procedure Act, as reported by The Chosun Daily.

The decision made on December 11 addresses years of uncertainty regarding whether cryptocurrencies kept on trading platforms qualify as seizable assets during criminal inquiries.

This ruling arrives as South Korean authorities intensify enforcement actions within the crypto sector, imposing fines amounting to billions of won on prominent exchanges while planning to expand their asset seizure capabilities.

Legal analysts assert that this precedent clarifies the classification of digital assets in criminal matters and will influence upcoming investigations involving virtual currencies.

According to The Chosun Ilbo, South Korea’s Supreme Court has ruled for the first time that bitcoins held on exchanges like Upbit and Bithumb are subject to seizure under the Criminal Procedure Act, as they are considered electronically recorded assets with economic significance…

— Wu Blockchain (@WuBlockchain) January 9, 2026

Court Affirms Bitcoin Qualifies for Seizure Under Criminal Law

The case began in January 2020, when authorities seized 55.6 Bitcoin, valued at around 600 million won, from an individual being investigated for money laundering.

The individual contested the seizure, asserting that Bitcoin stored in exchange accounts did not meet the definition of physical property eligible for confiscation under Article 106 of the Criminal Procedure Act, which restricts seizures to evidence or items “recognized as related to the case.”

After the Seoul Central District Court upheld the seizure as valid, the Supreme Court’s Second Division, led by Justice Kwon Young-jun, confirmed that ruling on appeal.

The court indicated that seizure targets under the Criminal Procedure Act include both physical items and electronic data, with Bitcoin qualifying as “an electronic token that can be independently managed, traded, and significantly controlled in terms of economic value.”

The justices observed that the management and trading of Bitcoin within exchanges can be effectively controlled by holders through private keys stored in digital wallets, providing adequate control to fulfill seizure criteria.

This decision builds upon the Supreme Court’s 2018 ruling that classified Bitcoin as intangible property with economic value subject to state confiscation, as well as its 2021 ruling recognizing virtual assets as property interests in fraud cases.

Ruling Comes as Regulators Enhance Seizure Powers

The Supreme Court’s clarification aligns with proposals from the Financial Services Commission to establish a payment freeze system enabling authorities to lock crypto accounts prior to the withdrawal of suspected criminal proceeds.

Officials informed local media in November that existing regulations necessitate court warrants during the prosecution stage, leading to delays that permit suspects to transfer funds into private wallets or offshore platforms beyond regulatory control.

The proposed system would resemble stock market regulations introduced under the April 2025 amendments to the Capital Markets Act.

South Korea may implement preemptive crypto account freezes to prevent price manipulation and illicit profits. #SouthKorea #MarketManipulation https://t.co/WS9qDxcOd2

— Cryptonews.com (@cryptonews) January 6, 2026

In September, regulators froze 75 accounts associated with a 100 billion won stock manipulation scheme, hindering the withdrawal of 40 billion won in realized and unrealized gains.

FSC members cited this case as proof that the strategy could be effective in the crypto sector, where assets are even more readily hidden once they exit regulated platforms.

South Korea’s Virtual Asset User Protection Act, which became effective in July 2024, reinforced exchange responsibilities to monitor suspicious activities but did not grant preemptive asset freeze authority.

A subsequent legislative phase addressing stablecoins, market abuse, and enforcement gaps remains stalled in 2026 as the Financial Services Commission and Bank of Korea debate whether stablecoin issuers should be bank-led consortia.

In addition to trading enforcement, authorities are tightening compliance across exchanges.

The Financial Intelligence Unit imposed a fine of 27.3 billion won on Korbit in December following 22,000 violations of anti-money laundering regulations, after earlier penalties against Upbit totaling 35.2 billion won.

South Korea’s Financial Intelligence Unit fines crypto exchange Korbit $1.89M for violations. #Crypto #Regulation https://t.co/fqGj3jWHWF

— Cryptonews.com (@cryptonews) December 31, 2025

Bithumb, Coinone, and GOPAX continue to be under scrutiny, with total fines across the sector projected to reach hundreds of billions of won.

An attorney well-versed in virtual asset litigation told The Chosun Daily that the ruling “clarifies the legal status of coins stored and traded on virtual asset exchanges and specifies that they can be lawfully seized during investigations,” adding that it should “alleviate practical disputes and uncertainties regarding seizure searches of exchanges.”

Amid these developments, South Korea has concurrently advanced efforts to legitimize crypto markets.

Korea Exchange chairman Jeong Eun-bo announced plans earlier this month to introduce crypto ETFs and extend trading hours to 24/7 operations, while the government also recently lifted a seven-year ban on venture capital funding for crypto firms.

The post South Korea’s Top Court Rules Bitcoin on Exchanges Can Be Seized appeared first on Cryptonews.