Legal confusion has broken out in South Korea as experts and lawyers remain uncertain as to whether the police can confiscate the cryptocurrency holdings of Telegram Nth room chief suspect Cho Joo-bin.
Cho is suspected of running a network of chat rooms that circulated sexual exploitation videos, with graphic footage of rape and sexual violence. A number of the victims are thought to have been underage. The most graphic content was made available in the so-called “Nth room,” which was allegedly accessible only to members who paid Cho up to USD 1,220 in cryptocurrencies.
Although police believe they have found Cho’s wallets, lawyers are divided as to how the funds within could be dealt with.
According to News1, Park Joo-hyun, a lawyer at legal firm Golden Rule, stated,
“There is currently no law that would let police confiscate any cryptocurrency collected by Mr. Cho. New laws pertaining to [crypto seizure] may take a year to enact.”
However, the issue is somewhat muddied by a court ruling in May 2018, whereby police were given the power to seize almost BTC 200 in a child pornography case.
The judge at the time stated.
“Bitcoin can be identified as a form of intangible property with a property value.”
The question of whether or not this and a handful of other cases involving cryptocurrency can be considered legal precedent will be hotly debated in the weeks ahead.
Another legal expert told News1 that unless Cho were to voluntarily surrender the private keys to his wallets, police might struggle to gain access to his holdings.
Meanwhile, a number of international exchanges have also pledged to cooperate with the police investigation – with KuCoin, Huobi and Binance all vowing to provide South Korean police with data that could help identify people who paid to access the Nth room and other associated chat rooms.
The South Korean crypto scene is dominated primarily by larger domestic companies, with overseas exchange branches making up just a small portion of the market. However, in recent months, the likes of Huobi Korea have become increasingly active. And, crucially, the South Korean police say that up to 100 payments to Cho’s wallets have already been traced back to accounts at exchanges based outside the country.
Per Decenter, Binance CEO Changpeng Zhao stated, that the exchange "always supports criminal investigations.”
Zhao added that transactions made using cryptocurrencies could be hard to trace when criminals were involved.
KuCoin’s legal team told the same outlet that "If the South Korean law enforcement authorities request our assistance, we will do our best to cooperate with investigators.”
And a Huobi Global spokesperson stated, “If we receive a request for cooperation as part of the investigation, we will definitely cooperate.”