Security experts in South Korea are raising urgent concerns over the management of cryptocurrency by law enforcement agencies after reports surfaced that police in Seoul have apparently “lost” nearly $2 million in Bitcoin. The cryptocurrency was supposedly stored on 22 USB thumb drives within a sealed vault at a police station located in the Gangnam District. However, the circumstances surrounding the disappearance of the Bitcoin remain unclear, as police have yet to offer an explanation.
The incident comes just weeks after prosecutors in Gwangju reported misplacing over $28 million in Bitcoin that was confiscated from individuals suspected of online gambling. An audit by the National Police Agency, prompted by the Gwangju case, led to the discovery of the missing Bitcoin in Seoul. This Bitcoin was voluntarily submitted by a suspect during an investigation that initiated back in November 2021, though that investigation has since been suspended.
Reports indicate that the drives themselves were left intact, stirring speculation among security experts about possible insider involvement. They warn that the manner in which the Bitcoin appears to have been removed from the drives suggests that someone with direct access to the cold wallets or their security credentials could be responsible.
Experts have called for an urgent overhaul of the crypto management practices employed by South Korean police and public prosecutors. They emphasized the need for a complete redesign of these systems to prevent future occurrences of such significant losses.
The ongoing inquiries into both the Seoul and Gwangju incidents underscore the vulnerabilities that exist within the management of digital assets by law enforcement. In Gwangju, preliminary investigations revealed that the loss of the Bitcoin likely resulted from a misguided attempt by prosecutors to utilize online tools to check the balances of the seized wallets. Unfortunately, in doing so, they inadvertently connected to a phishing site masquerading as a legitimate wallet checker, which ultimately led to the theft of the cryptocurrency.
As the investigations continue, the implications of these failures raise profound questions about the security and custodianship of cryptocurrency held by public institutions, highlighting the urgent need for improvements in technology and protocols to safeguard these valuable digital assets.
