South Korean authorities have intensified their crackdown on crypto-related financial crime, preserving 381.4 billion won (approximately $275 million) in illicit proceeds for forfeiture. At the same time, tax officials have proposed legislative changes to enable the seizure of self-custodied digital assets, addressing a gap that currently leaves privately held cryptocurrencies outside the reach of existing laws.
The Justice Ministry announced that a specialized joint investigation unit at the Seoul Southern District Prosecutors’ Office booked 304 suspects and arrested 25 individuals over a twelve-month period ending May 2026. The preserved assets include cryptocurrencies, cash, real estate, and other property linked to securities fraud, market manipulation, and money laundering. The crackdown reflects South Korea’s growing ability to trace and freeze illicit funds across exchanges and wallets, and underscores its commitment to returning assets to victims or forfeiting them to the state.
In parallel, four officials from the National Tax Service, led by investigation team leader Jang Hee-won, published a paper in the Korea Institute of Criminology and Justice’s Criminal Policy Research journal. They proposed amendments to the Criminal Procedure Act to formally allow authorities to seize self-custodied virtual assets—those held through private keys rather than on exchanges. The paper notes that a 2025 Supreme Court ruling confirmed Bitcoin in an exchange wallet could be seized as property, but it did not clarify procedures for wallets controlled solely by individuals.
The researchers argued that current law fails to prevent suspects from retaining copies of private keys, making transfer of funds easy even after seizure. Article 120 of the Criminal Procedure Act, they say, was not designed for blockchain-based assets. The proposal therefore recommends that search warrants specify the asset type, quantity, wallet addresses, transfer methods, and storage procedures. To minimize theft and misuse risks, seized assets should be held in court-supervised, jointly managed wallets rather than by a single agency. In urgent cases, temporary transfers to a court-designated address would be permitted.
The push for new legislation comes months after a National Tax Service security lapse exposed a wallet recovery phrase in a press release, resulting in the unauthorized transfer of about $4.8 million in crypto. That incident prompted the agency to review private custody solutions and improve its asset handling protocols. Together, the successful large-scale seizure and the proposed legal framework signal South Korea’s aggressive push to bring even self-custodied digital assets under regulatory and law enforcement oversight.
