High Court rules that the government can seize crypto from South Africans

The Johannesburg High Court has ruled that Bitcoin legally constitutes “money” and “capital”, meaning that transferring cryptocurrency offshore without regulatory approval is illegal and can result in asset forfeiture.

This is according to Tax Consulting SA’s cross-border taxation and exchange control team lead, John-Paul Fraser, and tax attorney, Nkosikhona Majozi, who said it is a significant judgment for South Africa’s cryptocurrency market.

On 1 June 2026, the Johannesburg High Court ruled that Bitcoin constitutes “money” and “capital” under South African law.

Consequently, moving Bitcoin offshore without regulatory permission is illegal, just as it would be if you tried to wire hundreds of millions of rands to a foreign bank account without approval.

The case centred around the behaviour of Square Mangundhla, who, between January 2018 and March 2020, funnelled just under 1,680 Bitcoin purchased in South Africa, worth about R182 million.

This was transferred to Bitcoin wallets accessible only through cryptocurrency exchanges registered outside South Africa.

During this period, he used cryptocurrency trading accounts on the popular Luno platform – including an account belonging to a second applicant, Fungai Dangaiso, which he used to get around trading limits.

The South African Reserve Bank (SARB) viewed this conduct as exportation of the bitcoin and its rand value, contrary to the Exchange Control Regulations.

The Deputy Governor, also a respondent in the case, declared forfeited to the state about R6 million in Bitcoin assets and money standing to the applicants’ credit in their respective bank accounts and cryptocurrency trading accounts.

This was done on the basis that this money and cryptocurrency were either the proceeds of Mangundhla’s contravention of the Regulations, or was itself in the process of being unlawfully exported.

Mangundhla and Dangaiso challenged the forfeiture order. However, the court dismissed their application, Fraser and Majozi said.

Judge bashes “magical thinking”

Fraser and Majozi explained that Wilson J, the judge who presided over the case, did not mince his words.

He described the argument that cryptocurrency falls outside South Africa’s financial laws as a form of “magical thinking”.

This argument, he said, “misconstrues the nature of money, underplays the destructive effects of unregulated capital flows, and ignores the fundamental purpose of the Exchange Control Regulations.”

The judge pointed to the Exchange Control Regulations, which was issued under the Currency and Exchanges Act of 1933.

He stressed that it exists for a very specific reason – to prevent South Africa’s financial resources from being drained out of the country without oversight.

They require anyone wishing to move capital abroad to obtain permission from the National Treasury. The rules have been in place for decades and apply to everything from foreign investments to offshore bank accounts.

The court found that Bitcoin fits squarely within the definition of “capital” – meaning any financial asset capable of holding value or being used as a medium of exchange.

Bitcoin can be bought with rands, held as an investment, sold for a profit, and in some places used to pay for goods and services.

That, the court ruled, is capital, regardless of whether it lives on a blockchain rather than in a bank account, Fraser and Majozi said.

Why the Ruling matters – even for those who have never bought Bitcoin

While the case concerns cryptocurrency, Fraser and Majozi said its significance extends beyond Bitcoin users and traders.

“The judgment provides clarity on the treatment of digital assets under South African exchange control legislation and illustrates how existing legal principles may be applied to new financial technologies.”

Interestingly, this judgment comes only a few months after the Minister of Finance Enoch Godongwana’s 2026 Budget Speech.

During his speech, he announced that draft regulations are being prepared to formally bring cryptocurrency into South Africa’s capital flow management regime. The Mangundhla ruling accelerates that momentum considerably.

On 17 April 2026, the National Treasury published the Draft Capital Flow Management Regulations for public comment.

These draft regulations mark a significant tightening of regulations on the use and movement of crypto assets in South Africa.

They specifically focus on managing capital flows through a risk-based approach. Comment must be submitted by 30 June 2026.

Notably, Fraser and Majozi pointed out that just months ago, in a case involving Standard Bank, a different Johannesburg High Court judge reached the opposite conclusion.

That judge ruled that cryptocurrency was not capital under the Regulations and that the SARB had overstepped its authority.

The ruling had been welcomed by the crypto industry as a green light for unregulated cross-border transfers. However, Wilson J has now explicitly declared that the earlier decision was “clearly wrong.”

“Two High Court judges. Two opposite rulings,” Fraser and Majozi said. “The matter is almost certain to be resolved by the Supreme Court of Appeal – but until then, the legal uncertainty is real, and the stakes are high.”

What the case means for South Africans

Fraser and Majozi explained that for South Africans who hold, trade, or transfer cryptocurrency, this judgment has direct practical implications. First, this case makes it clear that moving crypto offshore is not a free pass.

“Transferring Bitcoin or any other digital asset to a foreign exchange or wallet without SARB approval could expose you to the same penalties that apply to illegal capital flight – including the forfeiture of your assets.”

This High Court ruling also shows that crypto can be seized in South Africa, Fraser and Majozi cautioned.

“The court confirmed that the SARB has the power to declare cryptocurrency forfeited to the State where it is used to circumvent exchange controls. This is not a theoretical risk – it happened in this very case.”

Finally, they said, financial institutions and licensed Crypto Asset Service Providers are watching and will take notice that cross-border crypto flows carry the same regulatory weight as traditional foreign currency transactions.

“From a compliance perspective, the ruling underscores the importance of treating cryptocurrency transactions involving cross-border elements as potentially reportable exchange control transactions.”

This is particularly where value is transferred between South African residents and offshore platforms, Fraser and Majozi said.

“The judgment arrives at a time when South African regulators are actively considering further reforms relating to digital assets and cross-border capital flows.”

“This ruling is a clear signal that the courts – and the Reserve Bank – are no longer willing to let crypto assets slip through the cracks and that the blockchain does not put you beyond the reach of South African law.”

They encouraged everyone from seasoned crypto traders and fintech entrepreneurs to those who simply bought a little Bitcoin during the pandemic to take stock of their cross-border digital asset exposure and dealings.

Now is the best time to seek proper legal and financial advice, before the regulatory window closes even further.