South Korea’s Supreme Court made a decisive call on Dec. 11, 2025: Bitcoin held on centralized exchanges can be seized in criminal proceedings. The ruling closes off a common gray area in custody debates and directly applies to 55.6 BTC that authorities had already confiscated in a prior investigation.
What changes is the practical baseline for everyone touching exchange custody. Coins sitting with an intermediary are not insulated from warrants, which tightens the operating requirements for exchanges and forces users—retail and institutional—to reassess how they park assets when legal risk is non-zero.
According to The Chosun Ilbo, South Korea’s Supreme Court of Korea has ruled for the first time that bitcoins held on exchanges such as Upbit and Bithumb are subject to seizure under the Criminal Procedure Act, as they constitute electronically recorded assets with economic value…
— Wu Blockchain (@WuBlockchain) January 9, 2026
How the court anchored the decision
The court’s logic is straightforward in the text you provided. It treats virtual assets as “electronic tokens with economic value” and, on that basis, “objects of seizure” under the Criminal Procedure Act. In other words, if the asset has economic value and sits within a structure that can be controlled by lawful process, it fits inside the existing seizure toolkit.
This wasn’t framed as a one-off leap. The decision is presented as part of a steady legal progression that already included recognizing Bitcoin as confiscable intangible property (2018) and treating crypto as a property interest under criminal law (2021). It also lands inside a broader domestic compliance environment that already expects exchange registration, real-name banking links, and the Virtual Asset User Protection Act (VAUPA) introduced in July 2024.
What this forces exchanges and users to do differently
For exchanges, the operational message is blunt. Freeze-and-seize handling becomes a first-class workflow, not an edge case. That means faster processing of preservation and confiscation orders, tighter transaction tracing, and more disciplined KYC/AML controls, because any latency or ambiguity becomes a direct execution risk when law enforcement is moving.
If you leave balances on a centralized platform, you are implicitly accepting that those balances can be frozen or confiscated under criminal warrants. That reality can push demand toward self-custody, or toward more structured custody options where control, segregation, and governance are clearer—especially for institutions that need predictable risk treatment.
Prosecutors and police now have clearer authority to target exchange-custodied crypto linked to illicit proceeds, which increases the probability that enforcement actions translate into real asset restraint rather than procedural debate.
The downstream impact shows up in liquidity and product operations too. Account-level freezes can disrupt intraday liquidity management, increase operational overhead, and force exchanges to improve disclosure and controls around restricted accounts. That’s a measurable cost and a measurable execution constraint.
How quickly exchanges can run auditable freeze procedures, and how clearly they communicate custody risk to clients, will determine whether this becomes a clean operational upgrade or a recurring source of friction across trading, custody, and compliance.