High Court: Bitcoin is capital, seizure of 1,680 BTC upheld

On June 1 a South African High Court ruled that bitcoin can be treated as capital and as a negotiable instrument and upheld the South African Reserve Bank’s 2022 seizure of trader Square Mangundhla’s 1,680 bitcoins.

The central bank had seized the assets after finding that Mangundhla transferred funds from the local exchange Luno to overseas platforms. The court found that conduct breached exchange control rules that prohibit exporting capital without Treasury approval and making payments to nonresidents without permission.

Judge Stuart David James Wilson wrote that bitcoin meets legal tests for holding value and serving as a medium of exchange: it is purchased with rands, held for speculation and accepted by some merchants. Wilson rejected Mangundhla’s argument that bitcoin is not capital, money or a security under the Currency and Exchanges Act of 1933 and the Exchange Control Regulations of 1961.

Wilson questioned a 2025 High Court ruling by Judge Mandlenkosi Motha, which emphasized cryptocurrency’s technological features and concluded it was not capital. He wrote that exchange control legislation should be applied to prevent unchecked outflows of value rather than focus solely on an asset’s technology.

On the legality of the forfeiture, Wilson found bitcoin qualifies as a “negotiable instrument” under the Exchange Control Regulations and therefore as a form of money, which made the central bank’s confiscation lawful. The judge warned that excluding cryptocurrency from exchange controls would allow conversion of rands into bitcoin and transfer of value offshore without oversight.

The decision contrasts with a joint statement issued in late May by the South African Reserve Bank and the Financial Sector Conduct Authority that said cryptocurrencies are “neither money as defined in the NPS Act nor funds and are therefore not legal tender.” That statement reflected the view in the 2025 Motha ruling.

Legal experts expect the judgment to prompt appeals or further litigation to clarify how existing statutes apply to digital assets. The ruling indicates that, in at least some cases, South African courts may permit regulators to apply exchange control rules to cryptocurrency when value is moved abroad.

The case highlights that the Currency and Exchanges Act of 1933 and the Exchange Control Regulations of 1961 were drafted long before decentralized digital assets existed. The court’s reasoning emphasized the economic function of bitcoin-its capacity to store and transfer value-over its technical design.