South Korea's Supreme Court explicitly confirms that exchange-held Bitcoin can be confiscated, marking a new phase in crypto enforcement

At the beginning of 2026, South Korea’s cryptocurrency regulation faces a significant judicial turning point. On December 11, 2025, the Supreme Court of Korea issued a landmark ruling, explicitly recognizing that Bitcoin stored in accounts on domestic exchanges such as Upbit and Bithumb constitutes property that can be seized and confiscated under the Criminal Procedure Act. This is the first time the highest judicial authority in Korea has provided a clear answer to “whether Bitcoin within exchanges can be confiscated,” ending a long-standing legal gray area.

From Gray Area to Legal Clarity

This ruling originated from a money laundering investigation. In January 2020, police seized 55.6 Bitcoins stored in the accounts of involved parties during the investigation, amounting to approximately 600 million Korean won. The accused argued that Bitcoin, as a digital record within an account, does not qualify as “physical property” that can be seized under the Criminal Procedure Act.

The Supreme Court ultimately dismissed this claim. The court explicitly stated that objects subject to seizure under the Criminal Procedure Act are not limited to tangible items but also include electronic information that can be managed independently, has clear economic value, and can be substantially controlled by individuals. Since Bitcoin is controlled via private keys and is equally accessible and tradable within exchange platforms, it meets the legal standards for confiscation in criminal cases.

The Logical Chain of Judicial Progress

This ruling did not occur in isolation but reflects Korea’s gradual deepening understanding of the legal attributes of crypto assets.

From the 2018 asset property confirmation to the 2021 protection of property rights, and now to the 2025 clarification of enforcement feasibility, Korea’s judicial system is gradually establishing a comprehensive legal framework for crypto assets.

Upgrading Enforcement Tools

Alongside judicial clarification, regulators are also advancing enforcement capabilities. According to reports, South Korea’s financial regulators are studying the introduction of a “account freezing mechanism” similar to that in securities markets to prevent involved crypto assets from being rapidly transferred to personal wallets or overseas platforms before cases are filed or prosecuted.

The core consideration for this tool upgrade is tracking difficulty. Regulators point out that once assets leave regulated platforms and enter personal wallets or overseas exchanges, tracking and enforcement become significantly more difficult. Establishing freezing mechanisms at the exchange level can lock assets early in investigations, greatly improving enforcement efficiency.

Increasing Industry Compliance Pressure

On the enforcement front, South Korea’s crypto industry faces tightening compliance scrutiny. Several domestic platforms have been fined heavily for anti-money laundering and internal control issues. The emergence of this ruling further reinforces platforms’ compliance obligations—not only to prevent users from engaging in illegal activities within the platform but also to cooperate with judicial authorities in asset seizure.

For exchanges, this means establishing more robust user identity verification, transaction monitoring, and data retention mechanisms. For users, holding crypto assets on exchanges is no longer a “gray area” but fully under legal regulation.

Summary

This Supreme Court ruling in Korea carries three significant implications. First, it ends the ambiguity regarding the legal status of crypto assets, clarifying that digital assets like Bitcoin are property within the legal system. Second, it provides law enforcement with a clear judicial basis, significantly enhancing Korea’s enforcement efficiency in the cryptocurrency field. Third, it marks a shift in major global economies’ regulation of crypto assets from “whether to regulate” to “how to regulate more effectively.”

This transformation will have profound industry impacts. On one hand, compliant exchanges will gain stronger legal protections; on the other hand, the costs of illegal activities will rise sharply. For crypto asset users, choosing regulated platforms and ensuring compliant operations have become necessary options rather than optional ones.