South Korea’s Supreme Court has made a pivotal ruling that alters the legal treatment of Bitcoin stored on centralized exchanges in criminal investigations. For the first time, it has clarified that law enforcement can directly seize Bitcoin held in an exchange’s custody when it is associated with suspected criminal activities.
This ruling, finalized on December 11, 2025, and published in the court’s official records, originated from a money laundering case involving Bitcoin stored on a local trading platform. Authorities had confiscated 55.6 BTC from a suspect’s exchange account, and the court upheld this action, affirming that such assets are subject to seizure under current criminal procedure laws.
The crux of the court’s decision lies in its assertion that Bitcoin can be seized because it represents electronic information that holds independent economic value, is tradable in the market, and can be practically managed. This interpretation clarifies the previous uncertainty regarding the treatment of digital assets held in exchange custody compared to other properties that can be seized.
Significance of the Ruling
Earlier Supreme Court rulings had already acknowledged Bitcoin as property that can be confiscated and as proceeds from criminal activity. However, those cases did not specifically address assets within centralized exchange wallets. This new decision effectively closes that loophole.
By explicitly extending seizure authority to Bitcoin held in exchanges, the ruling establishes a crucial precedent for future investigations, enabling prosecutors to act directly against exchanges instead of relying on voluntary cooperation or waiting until after a conviction. For users, this indicates that Bitcoin on platforms like Upbit and Bithumb is now vulnerable to immediate enforcement actions if linked to alleged illegal activities.
Additionally, the ruling increases the responsibilities of exchanges, requiring them to respond promptly to warrants, keep accurate Know Your Customer (KYC) records, and ensure their transaction tracing capabilities are sufficient to support law enforcement requests without delay.
Alignment with International Standards
This ruling mirrors enforcement practices already established in the United States and parts of the European Union, where authorities regularly freeze and seize Bitcoin and other digital assets held by centralized intermediaries during criminal investigations.
In light of this ruling, South Korean regulators are contemplating the expansion of administrative powers. The Financial Services Commission is exploring a proposal that would permit the temporary freezing of cryptocurrency accounts suspected of market manipulation before obtaining a court order. Similar measures exist in South Korea’s equity markets to combat wash trading and coordinated price manipulation.
Beyond law enforcement, this ruling coincides with broader policy initiatives. The government is advancing a second phase of legislation on digital assets as part of its 2026 Economic Growth Strategy. Proposed actions include licensing and reserve requirements for stablecoin issuers, clearer regulations for cross-border stablecoin transfers, and plans to introduce spot digital asset exchange-traded funds.
Overall, these developments indicate that South Korea is moving from regulatory ambiguity toward a more defined digital asset framework. The Supreme Court’s decision emphasizes that crypto assets, particularly those held on centralized platforms, will be regarded with the same legal seriousness as traditional financial assets.
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