South Korea Supreme Court Proposes New Crypto Seizure Rules

South Korea's Supreme Court on Wednesday released draft rules to standardize how courts seize and liquidate crypto assets in civil enforcement cases, a move that creates formal procedures for converting digital holdings into cash. The proposal, open for public comment through August 11 with an implementation date of October 1, outlines court orders that can freeze a debtor's crypto, restrict third-party intermediaries from transferring assets, and authorize liquidation through regulated service providers or by swapping into highly liquid coins before sale.

Under the draft, once a seizure order takes effect, a "third-party debtor" – an exchange or custodian holding the assets – is restricted from transferring the crypto, and the debtor cannot dispose of related rights. Courts may then monetize holdings via a transfer order or a sale order. Proposed sale methods include entrusting liquidation to a virtual asset service provider, moving assets to an enforcement officer's account, or swapping into a highly liquid crypto before converting to fiat. The attention to execution mechanics – spread, depth, and venue choice – marks a practical acknowledgment that forced sales do not happen at a single price.

The rulemaking follows on-chain security losses that totaled $1.32 billion in the first half of 2026, according to CertiK's H1 2026 report. Wallet compromises accounted for about $450 million, the largest category by dollar loss. Code vulnerabilities drove 204 incidents, with CertiK noting that long-running smart contracts that have not undergone re-audits are becoming prime targets. Two large exploits at Kelp DAO and Drift Protocol combined for about $577 million, or roughly 44% of total losses. CertiK reported that while phishing incidents fell in count, attacks increasingly targeted high-net-worth victims and institutions.

Separate warnings from Coinspect flagged a wallet-generation weakness dubbed "Ill Bloom" that has exposed thousands of accounts across Bitcoin, Ethereum, Solana, and multiple layer-2 networks since 2018. Coinspect estimated about $3 million had been stolen from hundreds of accounts as of May 27, with another $2 million transferred from vulnerable wallets in the following hours. Coinspect released a tool to help identify affected addresses and urged wallet providers to integrate detection features for vulnerable mnemonic phrases. Blockaid monitoring also showed Summer.fi under attack, with approximately $6 million stolen.