South Korean Supreme Court docket guidelines that cryptocurrency exchanges may be seized

• The South Korean Supreme Court docket has dominated that digital currencies on exchanges may be seized primarily based on present legislation.
• This resolution applies in felony investigations equivalent to cash laundering, fraud, and embezzlement.
• Whereas law-abiding customers is not going to be affected, the ruling closes a loophole in world crypto seizure requirements.

South Korea’s Supreme Court docket has dominated that digital currencies held on native exchanges may be seized underneath present legislation. This resolution eliminates a long-standing authorized grey space and adjustments the way in which crypto belongings are dealt with in felony circumstances.

The ruling impacts customers of main exchanges equivalent to Upbit and Bithumb, which collectively maintain greater than $33 billion in cryptocurrencies. On January 8, the courtroom dominated that Bitcoin and different digital currencies fall underneath the class of seizable property underneath the Prison Process Code.

The case started with a cash laundering investigation in 2020, when authorities seized 55.6 BTC value about 600 million received (roughly $413,000 on the time) from the suspect’s alternate account. The defendants argued that Bitcoin couldn’t be seized as a result of it had no bodily type.

The courtroom disagreed, stating that Bitcoin is an digital asset with financial worth that may be owned, traded, and managed, making it topic to authorized seizure.

In mild of the earlier Bitcoin ruling

This resolution builds on earlier Supreme Court docket choices. In 2018, a courtroom dominated that Bitcoin is an intangible asset with financial worth and may be confiscated if obtained by felony exercise. Subsequent rulings additional acknowledged Bitcoin as a type of property in reference to fraud and monetary crime circumstances.

The newest ruling goes a step additional and explicitly confirms that cryptocurrencies saved on centralized exchanges like Upbit and Bithumb cannot solely be confiscated after a conviction, but in addition seized throughout an investigation.

What this implies for Upbit and Bithumb customers

This ruling doesn’t imply that authorities are free to grab cryptocurrencies. Seizures are solely allowed throughout felony investigations into crimes equivalent to cash laundering, fraud, bribery, embezzlement, and tax evasion.

Based mostly on the clarified guidelines, prosecutors and police can request exchanges to freeze or switch cryptocurrencies suspected of felony exercise. Exchanges are regulated and should adjust to these authorized necessities.

For law-abiding customers, there isn’t a distinction in how you utilize Upbit or Bithumb. The ruling primarily establishes clearer enforcement guidelines and makes it simpler for authorities to trace and get better illicit funds.

Is the $33 billion cryptocurrency actually in danger?

South Korean exchanges maintain greater than $33 billion in cryptocurrencies, however these funds should not robotically in danger. Authorities can solely seize belongings if there’s a clear authorized foundation associated to a selected investigation.

The ruling primarily closes a loophole that enables suspects to assert that their digital belongings couldn’t be seized. With this clarification, South Korea will now align extra intently with nations such because the US and UK, the place courts already acknowledge digital belongings as seizable property.

Associated: South Korea’s digital asset tax plan could also be delayed once more till 2027