South Korea Supreme Court Greenlights Direct Bitcoin Seizures from Exchanges
A landmark ruling involving 55.6 BTC confirms that exchange-held crypto assets are “electronic tokens” subject to direct seizure under criminal law.
South Korea’s Supreme Court has established a binding precedent that Bitcoin held in custodial exchange accounts is subject to direct confiscation, eliminating a legal gray area that previously shielded digital assets from standard seizure warrants.
The ruling, delivered by the court’s Second Division and reported by Edaily on Jan. 9, affirms that cryptocurrencies constitute "electronic tokens with economic value" capable of being independently managed and transferred. This classification brings exchange-held assets firmly under the jurisdiction of the Criminal Procedure Act, treating them as seizure targets identical to tangible property.
The 55.6 BTC Precedent
The decision stems from a 2020 money laundering investigation involving an individual identified as "Mr. A," whose 55.6 BTC was confiscated by police directly from a crypto exchange. The defendant challenged the seizure, arguing that Bitcoin held in a custodial wallet did not constitute a "physical object" and was therefore immune to traditional confiscation protocols.
The Supreme Court rejected this defense in its Dec. 11 decision, released today. The justices noted that because the assets are controlled via the user’s private credentials, even within a custodial environment, they represent a proprietary interest that can be "substantially controlled."
At the time of the original seizure in January 2020, the 55.6 BTC was valued at approximately 600 million won ($450,000). At today’s market rates, that same stash is worth over 7.3 billion won ($5.3 million), highlighting the high stakes of asset forfeiture in crypto investigations.
"Bitcoin, as an electronic token with the ability to be independently managed, traded, and substantially controlled in terms of economic value.". Supreme Court Ruling 2021Do1118
Institutional Implications
This ruling fundamentally alters the operational reality for South Korea’s major exchanges, including Upbit and Bithumb. Previously, authorities often relied on freezing orders or voluntary submission. Now, investigators possess the legal authority to execute direct seizure warrants against exchange wallets, compelling platforms to transfer custody of suspect assets immediately.
The decision aligns with the Financial Services Commission’s (FSC) broader push to tighten oversight under the Virtual Asset User Protection Act, signaling that the legal gap between digital and physical property rights in South Korea has officially closed.
