South Korea Supreme Court Confirms Police Can Seize Bitcoin Kept on Exchanges

South Korea’s highest court has removed any ambiguity: Bitcoin held at centralized exchanges is within reach of law enforcement. In a ruling that grew out of a 2020 money laundering probe, the Supreme Court affirmed that digital assets custodied by exchanges can be seized under the Criminal Procedure Act, rejecting an appeal that argued crypto is not a “physical object” under Article 106.

The case centered on 55.6 BTC—valued at roughly 600 million won ($413,000) at the time—taken from an exchange account belonging to an individual identified as Mr. A. After the Seoul Central District Court dismissed his motion for reconsideration, Mr. A appealed. The Supreme Court concluded that seizure targets cover tangible items and electronic information, and that Bitcoin—“an electronic token” that can be independently managed, traded, and economically controlled—falls squarely within assets that courts or investigative bodies may seize.

This outcome is not a departure. South Korean courts have repeatedly treated cryptocurrencies as property: in 2018, the Supreme Court recognized Bitcoin as intangible property subject to confiscation if tied to crime; that same year, tokens were deemed divisible in divorce; and in 2021, the court reiterated Bitcoin’s status as a property interest under criminal law. The backdrop matters: as of March 2025, over 16 million South Koreans—about one-third of the country—held accounts at major domestic exchanges.

The single point that deserves focus is custody. When users leave BTC on a centralized exchange, they accept the exchange’s control over the private keys—and by extension, the legal and operational perimeter that regulators and courts can act upon. Practically, this ruling strengthens the state’s leverage at the choke points: compliance desks, KYC-linked accounts, and exchange-managed wallets. For exchanges, expect tighter seizure and freezing protocols, deeper wallet segregation, and cleaner audit trails—down to UTXO-level evidence handling—so they can execute lawful orders while minimizing collateral impact on other customers’ balances.

For users, the psychological shift is subtle but real. Many assumed “crypto” implied autonomy regardless of venue; this decision reinforces a two-tier reality. On a CEX, your Bitcoin resembles a bank deposit in the eyes of the law—discoverable, freezeable, and, when warranted, seizable. In self-custody, enforcement becomes procedurally harder, though not impossible if courts order key surrender or target off-ramps. People won’t abandon exchanges en masse—convenience, liquidity, and fiat rails still dominate behavior—but higher-value holders may re-evaluate their allocation between exchange wallets and cold storage.

This clarity also reshapes business incentives. Large platforms will invest more in workflow automation for warrants, incident response playbooks, and coordination with chain analytics. Insurance underwriters and auditors will price custody and compliance controls more explicitly. None of this is inherently bearish for adoption; institutions often prefer clear rules, even if they are stricter, because they reduce procedural risk.

South Korea’s stance tracks with a wider legal trend. The UK recently enacted legislation that formally recognizes digital assets as property, providing statutory footing for courts to handle crypto in theft, inheritance, and insolvency matters. That harmonization—statutory in the UK, jurisprudential in Korea—accelerates asset recovery and reduces gray zones that bad actors exploit.

For serious market participants, the takeaway is simple: venue risk is legal risk. If your Bitcoin sits on a Korean exchange, model it like a regulated account. If you need sovereignty, use self-custody with disciplined key management. Either way, assume greater procedural rigor ahead across seizures, freezes, and asset tracing as crypto is integrated into standard property law.