In a shocking development, 22 Bitcoin have reportedly gone missing from a sealed police vault in central Seoul, prompting a criminal investigation and the arrest of two men. The lost cryptocurrency, valued at approximately $22 million, has raised serious questions about the management and security of digital assets held by law enforcement.
Earlier this month, South Korean prosecutors uncovered that the police had previously mismanaged $1.4 million worth of Bitcoin by storing them in an unnamed third party’s wallet instead of a secure police-controlled cold wallet, contrary to newly established guidelines. This mismanagement was brought to light after a separate incident in Gwangju where authorities temporarily lost control of 320 Bitcoin, now valued at over $20 million, during an unrelated case.
As a result of these incidents, the National Police Agency initiated an audit across all police stations, asking them to verify the status of seized cryptocurrencies. During this review, the Gangnam Police Station discovered the unsettling fact that the 22 Bitcoin, which had been confiscated in 2022, were missing.
The origins of the case date back to November 2021 when police were probing a suspected hack of a cryptocurrency exchange. During their investigation, officers identified a suspicious transaction where a user had sold a large volume of unnamed altcoins for Bitcoin and attempted to transfer the funds to an overseas exchange. The exchange managed to block some transactions, which left the 22 Bitcoin in a linked account. The account holder claimed innocence and “voluntarily surrendered” the Bitcoin to the police.
According to reports, the Gangnam Police were expected to store the Bitcoins securely using a police-controlled cold wallet. However, in a significant lapse of protocol, they decided to keep the Bitcoin in a cold wallet owned by a private company involved in the investigation. Sources have revealed that officers were not provided the wallet’s seed phrases—essential for securing and recovering the wallet—leading to further vulnerabilities.
It was reported that an employee affiliated with the company later handed over the seed phrases to a hacker connected to the case, and shortly thereafter, the Bitcoin vanished from the cold wallet maintained by the police station.
The circumstances surrounding how this hacker—or their associates—gained access to a police vault remain murky. Nonetheless, local authorities have apprehended two men in their 40s who are believed to be connected to the case.
Adding to the unfolding drama, a former investigator at Gangnam Police Station involved in the original hacking inquiry was imprisoned in August for 18 months on bribery charges related to the case. Testimonies from the court indicated that financial inducements were offered in exchange for favorable treatment during the investigation.
As the investigation into this incident continues, police officials have refrained from commenting on the details reported, stating that the specific circumstances surrounding the incident, including how the Bitcoin was leaked, are still under review. The case has raised pressing concerns about the safety and transparency of cryptocurrency management by law enforcement in South Korea.
