South Korea Sets Court Process to Seize Bitcoin for Unpaid Debts

South Korea will allow courts to use standardized procedures to freeze and liquidate Bitcoin (BTC) and other virtual assets to recover unpaid debts beginning Nov. 1.

The Supreme Court promulgated Rule No. 3280 on Oct. 12. The measure covers cryptocurrency held by exchanges as well as assets controlled directly by debtors, and it also applies to pending cases involving existing attachment or liquidation orders.

For exchange-held assets, courts may block custodians from transferring cryptocurrency to a debtor and request details including the asset type, quantity, priority claims and other enforcement actions. For directly held assets, courts may prohibit transfers and order delivery to an enforcement officer.

The rules provide several recovery routes. A court may order crypto transferred to a creditor, sold through a virtual-asset service provider, sold after being moved to an enforcement account or converted into another asset that is easier to liquidate. Sales must use the market price on the transaction date or another appropriate valuation.

The framework is intended to make civil debt enforcement more consistent as cryptocurrency becomes more common in court cases. Recovery may still be difficult when a debtor controls the private keys to self-custodied assets. The new procedures take effect Nov. 1.