The Korean Supreme Court ruled that Bitcoin stored in virtual asset exchanges such as Upbit and Bithumb is subject to seizure under the Korean Criminal Procedure Act. 

Facts

  1. In January 2020, the Korean National Police obtained a search and seizure warrant from a Korean court against the Defendant for violation of the Act on the Prevention of Concealment of Criminal Proceeds and seized over 55 Bitcoins stored in the Defendant’s virtual asset exchange account by transferring them to a Korean investigative agency.
  2. Defendant filed a quasi-appeal with the Seoul Central District Court, requesting the cancellation of the seizure of the Bitcoins, arguing that “Bitcoins are not objects subject to seizure under the current Criminal Procedure Act.”
  3. The Seoul Central District Court dismissed the quasi-appeal, stating that “virtual assets do not correspond to traditional ‘tangible objects,’ but they are electronic evidence premised on electronic transactions or transfers, and thus should be viewed as ‘objects that are expected to be confiscated’ under Article 106 of the Criminal Procedure Act.
  4. Defendant appealed to the Supreme Court.

Korean Supreme Court Holding

The Supreme Court of Korean opined that “virtual assets are electronic certificates that have economic value and can be traded or transferred electronically (Article 2, Paragraph 1 of the Act on the Protection of Virtual Asset Users, etc.), and Bitcoin is a type of virtual asset that can be independently managed through electronic wallets, etc., and transactions are made through private keys stored in electronic wallets. . . Bitcoin holders can exercise de facto control over the management or transactions of Bitcoin exclusively and exclusively through their private keys, which is ultimately equivalent to actually controlling the economic value of Bitcoin. . . According to the provisions of the Criminal Procedure Act, both tangible objects and electronic information are subject to seizure, which are evidence or items deemed to be confiscated under Articles 106 and 219 of the Criminal Procedure Act. In addition to the content and intent of these provisions, considering the characteristics of Bitcoin as mentioned above, Bitcoin, which is an electronic certificate with the possibility of independent management, tradability, and actual control over economic value, is also subject to seizure by the court or investigative agency.”

by Sean Hayes

Sean Hayes is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He is ranked among the Top Attorneys in Korea, and his law firm, IPG Legal, is ranked among the top dispute resolution law firms in Korea.

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